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In case of premature transfer of flats prior to receipt of CC, the taxable event occurs at the time of transfer of such flat.

Q. I went into joint development with a builder in Chennai where the land belonged to me and the builder got a pre-agreed number of flats in lieu of undertaking the construction. I want to sell one of my flats as soon as it is handed over, so I want to know if it will attract capital gains, especially because the current guideline value is the same as when I entered the joint agreement.

A. Joint Development Agreements (JDA) are taxed in the following manner:

At the time of handover of flats from the developer, Capital Gains shall be charged as income in the previous year in which a competent authority issues a Completion Certificate (CC) provided the JDA is registered. Full Value Consideration shall include guideline value as on CC date for the area surrendered and any monetary consideration received by you. However, in case of premature transfer of flats prior to receipt of CC, the taxable event occurs at the time of transfer of such flat.

At the time of sale of flats received by land owner from the developer to a third party, Capital Gains shall be charged at the time of transfer of flat received by the landlord from the developer to a third party. Full Value Consideration will be the monetary consideration received from the third party read with section 50C while the cost of acquisition for constructed portion of flat will be the proportionate guideline value at the time of receipt of CC calculated in the ratio – (constructed area sold divided by total constructed area received) multiplied by the guideline value of the area surrendered at the time of CC) and cost of UDS transferred shall be the proportionate purchase cost of the land area retained multiplied by UDS transferred to the prospective buyer divided by total area retained in the JDU. Kindly consider other aspects such as direct costs involved in transfer of property and also long term and short term based on the period of holding.

Q. My spouse and I jointly own a house. The EMI of the home loan is entirely paid my me. My wife is employed but her income is below the taxable limit. Can I claim the tax exemption for the entire amount of home loan interest or should I limit it to 50% as the house is jointly owned?

A. If both husband and wife are co-borrowers to the housing loan and only you are servicing the entire repayment obligation, you are eligible to claim deduction for the principal and the interest portions under Sections 80C and 24 respectively for the entire amount borne by you. You may claim the same as long as your co-borrower is not doing so. Be sure to request from your lender a Certificate of Interest in order to claim the benefits.

Q. I retired from government service in April 2017 from an Autonomous Council of Ministry of Environment, Forest & Climate Change, Govt. of India. Leave encashment amount was paid to me after TDS on amount exceeding ₹3 lakh. The amount has been added to my income and I paid the Income Tax on amount exceeding ₹3 lakh and filed the return for Assessment Year 2018-2019. But now some of my colleagues have claimed and received the refund of tax on the whole amount of leave encashment paid to them. I want to know whether I can claim the tax refund for the leave encashment amount added to my income in excess of ₹3 lakh for the Assessment Year 2018-2019?

A. Leave encashment received by a Central/State government employee at the time of retirement is fully exempt. The window to revise your ITR is now closed and there is no possibility of rectifying the ITR as rectification of ITR does not allow this type of a rectification. You cannot claim any refund of the tax paid on account of the amount received towards leave encashment now.

(The writer is a partner, GSS Associates, Chartered Accountants, Chennai)

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