Section 45(5A) – New Simplified mode of Taxation of Joint Development Agreement

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New sub-section (5A) is insert in section 45 by the Finance Act, 2017, w.e.f. 1-4-2018 to tax joint Development agreement. An easy and simple worded section reads as under : Section 45(5A)

(5A) Notwithstanding anything contain in sub-section (1), where the capital gain arises to an assessee, being an individual or a Hindu undivid family, from the transfer of a capital asset, being land or building or both, under a specify agreement, the capital gains shall be chargeable to income-tax as income of the previous year in which the certificate of completion for the whole or part of the project is issue by the competent authority; and for the purposes of section 48, the stamp duty value, on the date of issue of the say certificate, of his share, being land or building or both in the project, as increase by the consideration receive in cash, if any, shall be deem to be the full value of the consideration receive or accruing as a result of the transfer of the capital asset : Section 45(5A)
Provided that the provisions of this sub-section shall not apply where the assessee transfers his share in the project on or before the date of issue of said certificate of completion, and the capital gains shall be deemed to be the income of the previous year in which such transfer takes place and the provisions of this Act, other than the provisions of this sub-section, shall apply for the purpose of determination of full value of consideration received or accruing as a result of such transfer. Section 45(5A)

Explanation.—For the purposes of this sub-section, the expression—

 (i)  “competent authority” means the authority empowered to approve the building plan. By or under any law for the time being in force;

(ii)  “specified agreement” means a registered agreement in which a person owning land or building or both. Agrees to allow another person to develop a real estate project on such land or building or both. In consideration of a share, being land or building or both in such project. Whether with or without payment of part of the consideration in cash;

(iii) “stamp duty value” means the value adopted or assessed or assessable by any authority of Government. For the purpose of payment of stamp duty in respect of an immovable property being land or building or both. Section 45(5A)

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