Can I avail index cost adjustment to compute Capital Gain for a flat I am selling without taking possession

hemants 1
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Greetings, I paid (in full via a loan and downpayment) for construction of the flat to a builder in 2006. The flat got constructed in late 2011. Now I am selling the flat before actually taking possession. So the builder will transfer the flat from my name to the new buyer. My question is - will I be able to use index cost difference from 2006 to 2012 to calculate my capital gain in this scenario even though I did not take possession of the said flat?

Is allotment considered same as an agreement to buy? I found some information online saying that index cost can start from the time of allotment. In my case allotment of a specific flat was done in 2011 however agreement to buy was done in 2006 and that is when I paid the builder in full.

Thank you so much for any input you can provide. Hemant

pre-possession under-construction short-term-gains cost-inflation-index income-tax
1 Answers

You won't be able to take benefit of indexation. Whole gains would be taxable to you as per your slab rates.

Allotment/Agreement to buy does not make ownership. Registered deed and possession takeover is required.

Pankaj Batra5212
hemants•

There has been some cases where allotment date has been considered for capital gains computation. But in these cases, owner had provided enough evidences to prove that possession was out of his control.

If you want you may also take allotment date as ownership date and compute long term gains. Income tax department may raise query if they have doubt and then you may have to handle this case in court.

Pankaj Batra•
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