{"id":5414,"date":"2023-03-14T18:12:08","date_gmt":"2023-03-14T18:12:08","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=5414"},"modified":"2024-09-23T16:06:02","modified_gmt":"2024-09-23T16:06:02","slug":"capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/","title":{"rendered":"Capital Gains arise from sale of TDR or FSI is Taxable Now"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5415\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/Capital-Gain..jpg\" alt=\" Redevelopment is taxable \" width=\"952\" height=\"419\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/Capital-Gain..jpg 600w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/Capital-Gain.-300x132.jpg 300w\" sizes=\"(max-width: 952px) 100vw, 952px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69f556beedfc6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69f556beedfc6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Capital_Gains_arise_from_sale_of_TDR_or_FSI_in_Redevelopment_is_taxable_after_April_2023\" title=\"Capital Gains arise from sale of TDR or FSI in Redevelopment is taxable after April 2023\">Capital Gains arise from sale of TDR or FSI in Redevelopment is taxable after April 2023<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Earlier_Income_tax_Situations\" title=\"Earlier Income tax Situations \">Earlier Income tax Situations <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#New_Change_in_Income_tax_under_the_Budget_2023\" title=\"New Change in Income tax under the Budget 2023. \">New Change in Income tax under the Budget 2023. <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Redevelopment_Issues_Malpractices_Concerns_Checklist\" title=\"Redevelopment Issues, Malpractices, Concerns &amp; Checklist \">Redevelopment Issues, Malpractices, Concerns &amp; Checklist <\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#What_is_Redevelopment\" title=\"What is Redevelopment?\">What is Redevelopment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Why_Redevelopment\" title=\"Why Redevelopment?\">Why Redevelopment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Why_few_Rebellious_Members_Obstruct_Redevelopment_of_Housing_Societies\" title=\"Why few Rebellious Members Obstruct Redevelopment of Housing Societies\">Why few Rebellious Members Obstruct Redevelopment of Housing Societies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Defining_of_cost_of_acquisition_in_case_of_few_assets_for_computing_under_the_head_capital_gains_-Budget_2023\" title=\"Defining of cost of acquisition in case of few assets for computing under the head capital gains -Budget 2023\">Defining of cost of acquisition in case of few assets for computing under the head capital gains -Budget 2023<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Impact_of_Budget_2023_Changes\" title=\"Impact of Budget 2023 Changes\">Impact of Budget 2023 Changes<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Income_tax_rate_in_case_of_capital_Gain_regulation_in_India\" title=\"Income tax rate in case of capital Gain regulation in India\">Income tax rate in case of capital Gain regulation in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caindelhiindia.com\/blog\/capital-gains-arise-from-sale-of-tdr-or-fsi-is-taxable-now\/#Ready_Recknor_for_calculating_capital_gains_tax_for_all_class_of_Assets\" title=\"Ready Recknor for calculating capital gains tax for all class of Assets.\">Ready Recknor for calculating capital gains tax for all class of Assets.<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Capital_Gains_arise_from_sale_of_TDR_or_FSI_in_Redevelopment_is_taxable_after_April_2023\"><\/span><span style=\"color: #000080;\"><strong>Capital Gains arise from sale of TDR or <\/strong><\/span><span style=\"color: #000080;\"><strong>FSI in Redevelopment is taxable after April 2023<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Earlier_Income_tax_Situations\"><\/span><span style=\"color: #000080;\"><strong>Earlier Income tax Situations <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Redevelopment of residential housing societies is normally carried out generally via few Developers.<\/li>\n<li>Earlier Income tax Stand: No capital gains tax on sale of Transferable Development Rights (TDR) in absence of cost of acquisition<\/li>\n<li>In case sale of transferable development rights did not taxable as capital gains tax because of cost of acquisition for the sale of transferable development rights did not exist.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"New_Change_in_Income_tax_under_the_Budget_2023\"><\/span><span style=\"color: #000080;\"><strong>New Change in Income tax under the Budget 2023. <\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>According to the Income tax Sec 55 is proposed to be change by the Finance Bill, 2023 w.e.f. 1.04.2023. Any development agreement executed on or after 1.04.2023 transferring Floor Space Index rights will be deemed to have been affected by this amendment, which may attract tax liability under the head capital gains as now the cost of such Floor Space Index rights will be presumed to be to be Nil.<\/li>\n<li>We can also say that, Above said amendment proposed under the budget seeks to nullify the ratio of the decisions discussed in last Para. With respect of our point of view, Amount of tax liability under the head capital gains will be huge.<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Redevelopment_Issues_Malpractices_Concerns_Checklist\"><\/span><strong><span style=\"color: #000080;\">Redevelopment Issues, Malpractices, Concerns &amp; Checklist<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-5416\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme.jpg\" alt=\"redevelopment is taxable \" width=\"1200\" height=\"700\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme.jpg 1200w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme-300x175.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme-1024x597.jpg 1024w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme-768x448.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2023\/03\/redevelopment-scheme-800x467.jpg 800w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"What_is_Redevelopment\"><\/span><span style=\"color: #000080;\"><strong>What is Redevelopment?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Redevelopment refers to the process of reconstruction of the old commercial\/ residential premises by demolition of the present structure &amp; construction of a new structure in its place.<\/li>\n<li>This is done by utilizing the potential of the land by exploiting Transferable Development Rights, additional Floor Space Index (FSI) as prescribed under latest Development Control Regulations (DCR).<\/li>\n<li>Redevelopment of Old structures is changing Mumbai\u2019s appearance.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Why_Redevelopment\"><\/span><span style=\"color: #000080;\"><strong>Why Redevelopment?<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>After certain age (Building after 30+ years), due to wear and tear and exposure to natural elements, building become weak<\/li>\n<li>Building in dilapidated position or condition<\/li>\n<li>Uneconomic to repair as cost of major repair is sometimes more than reconstruction<\/li>\n<li>Impact from corrosion particularly in cities like Mumbai which decreased building life &amp; old buildings are unable to withstand adverse conditions<\/li>\n<li>Present building has no Lift causing hardships to aged residents needing redeveloped tower with Lift<\/li>\n<li>Structural repair is not economically feasible to take care of seepage, weak walls and foundations, leaking water pipes, etc<\/li>\n<li>Aspiration of many occupants have gone up with Indian Economy doing well and they crave for more luxurious building &amp; space with modern luxurious amenities for example Clubs, Sports &amp; health related facilities<\/li>\n<li>owners or tenants occupants required more area due to increase of family size with change of generation.<\/li>\n<li>With redevelopment, the members get a new building, more space and monetary benefits without spending any money from their own pockets<\/li>\n<li>Property prices have skyrocketed making it unaffordable for many land &amp; building owners to look for larger which may be beyond their budget<\/li>\n<li>Building has unused development rights where they can build a new and higher structure where the additional space can be partly given to present members &amp; Partly sold for a tidy profit (specifically in self-redevelopment)<\/li>\n<li>Municipality &amp; State govt is giving concessions (of higher Floor Space Index, Transferable Development Rights with lower premium, transparent &amp; speedy approvals) for Redevelopment Projects<\/li>\n<li>Horizontal expansion is not feasible in a landlocked is land city like Mumbai and thus vertical expansion through redeveloping existing building in a tall towers become only option<\/li>\n<li>Horizontal expansion means required of more roads, transportation, drainage pipelines and that comes with big cost.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Why_few_Rebellious_Members_Obstruct_Redevelopment_of_Housing_Societies\"><\/span><span style=\"color: #000080;\">Why few Rebellious Members Obstruct Redevelopment of Housing Societies<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Issues in Redevelopment<\/li>\n<li>Consider these points before arriving at final decision<\/li>\n<li>Redevelopment of MHADA Buildings<\/li>\n<li>Important Caveats<\/li>\n<li>Concerns about Builder<\/li>\n<li>Checklist for Redevelopment of Housing Society<\/li>\n<li>Steps need for Redevelopment of Co-operative Housing Society Building.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Defining_of_cost_of_acquisition_in_case_of_few_assets_for_computing_under_the_head_capital_gains_-Budget_2023\"><\/span><span style=\"color: #000080;\"><strong>Defining of cost of acquisition in case of few assets for computing under the head capital gains -Budget 2023<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Earlier Section 55 Income tax provisions say that, inter alia, defines \u2018cost of acquisition\u2019 &amp; \u2018cost of any improvement\u2019 for the purposes of computing under the head capital gains tax. But Certain kind of capital Assets like intangible assets or any kind of right for which no consideration has been paid for assets acquisition.<\/li>\n<li>There is no specific provision which states that the cost of such assets is nil, the chargeability of income tax under the head capital gains from transfer of such assets has not found favour with the Courts.<\/li>\n<li>Therefore, to define the term \u2018cost of improvement\u2019 and \u2018cost of acquisition\u2019 of such assets, it is proposed to amend the provisions of section 55(2)(a) &amp; 55(1)(b) so as to provide that the \u2018cost of acquisition\u2019 or \u2018cost of improvement\u2019 of a capital asset being any intangible asset or any other right ( other than those mentioned in the said section 55(2)(a) &amp; 55(1)(b), as the case may be) shall be \u2018Nil\u2019. Above said amendment is will be take effect from the 1.04.2024 and shall accordingly; applicability in relation to the AY 2024-25 and subsequent AY.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Impact_of_Budget_2023_Changes\"><\/span><span style=\"color: #000080;\"><strong>Impact of Budget 2023 Changes<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>TDRs arising out of an present land was an immovable property, the transfer of such TDR amounted to transfer of a long-term capital asset, &amp; So Income tax taxpayer is liable to be taxed for the consideration received under \u201cCapital gains.\u201d<\/li>\n<li>Capital Gains arise derived from Transferable Development Rights (TDR) or Additional Floor Space Index (FSI) sale in Redevelopment is taxable under the head as Long term capital Gain after 1<sup>st<\/sup> April 2023<\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"Income_tax_rate_in_case_of_capital_Gain_regulation_in_India\"><\/span><a href=\"https:\/\/carajput.com\/publications\/income-tax-rate-in-case-of-capital-gain-regulation-in-india.pdf\" data-cke-saved-href=\"https:\/\/carajput.com\/publications\/income-tax-rate-in-case-of-capital-gain-regulation-in-india.pdf\"><strong>Income tax rate in case of capital Gain regulation in India<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"Ready_Recknor_for_calculating_capital_gains_tax_for_all_class_of_Assets\"><\/span><a href=\"https:\/\/carajput.com\/publications\/ready-recknor-for-calculating-capital-gains-tax-for-all-class-of.pdf\" data-cke-saved-href=\"https:\/\/carajput.com\/publications\/ready-recknor-for-calculating-capital-gains-tax-for-all-class-of.pdf\"><strong>Ready Recknor for calculating capital gains tax for all class of Assets.<\/strong><\/a><span class=\"ez-toc-section-end\"><\/span><\/h2>\n","protected":false},"excerpt":{"rendered":"<p>Capital Gains arise from sale of TDR or FSI in Redevelopment is taxable after April 2023 Earlier Income tax Situations Redevelopment of residential housing societies is normally carried out generally via few Developers. Earlier Income tax Stand: No capital gains tax on sale of Transferable Development Rights (TDR) in absence of cost of acquisition In &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[161,173],"tags":[903,734],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/5414"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=5414"}],"version-history":[{"count":2,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/5414\/revisions"}],"predecessor-version":[{"id":7942,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/5414\/revisions\/7942"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=5414"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=5414"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=5414"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}