Real Estate & JDA Taxation

Section 22: annual value (AV) of property is charged as 'income from house property'. AV = higher of (a) actual rent received/receivable, or (b) municipal rental value/fair rent, minus municipal taxes paid. Deductions: standard deduction of 30% of net annual value (Section 24(a)); home loan interest without limit for let-out property (Section 24(b)); and for self-occupied property: interest up to ₹2 lakh (old regime only). For more than 2 properties: all others treated as deemed let out at market rent for income tax purposes — taxable even if vacant.

Holding period for LTCG: >24 months. LTCG rate: 12.5% without indexation (post 23 July 2024). For properties purchased before 23 July 2024: the taxpayer can choose between 12.5% without indexation or 20% with indexation — whichever is lower. Cost of acquisition: actual cost + improvements + cost of acquisition through inheritance (Section 49 — original owner's indexed cost). STCG (held ≤ 24 months): taxed at slab rate.

Section 54: LTCG from sale of residential property is exempt if the entire LTCG amount is invested in purchasing one new residential property within 1 year before or 2 years after the sale, or constructing a house within 3 years. Only one house can be purchased (Finance Act 2023 limited to one property). Capital Gains Accounts Scheme (CGAS) deposit by the ITR due date if the new property is not yet purchased — the CGAS amount must be utilised within the remaining time period.

Section 195: a resident buyer purchasing property from an NRI must deduct TDS at 20% (LTCG) or 30% (STCG, or if holding period is uncertain) on the sale consideration, not just the gain — unless the NRI obtains a lower/nil deduction certificate (Form 13 application to AO) under Section 197. TDS is on the gross consideration: e.g., on a ₹1 crore property sale by an NRI, the buyer deducts ₹20 lakh TDS even if the NRI's gain is ₹10 lakh. Form 15CA/15CB is required for remittance of sale proceeds abroad.

Sections 68/69 of the Income Tax Act: unexplained investments in property are taxable at 60% plus 25% surcharge on tax (effective 78%) under Section 115BBE — no deductions. Section 2(16) of the Benami Transactions Act: property held in another person's name (benami) is liable to confiscation. Joint development agreements (JDA) — landowner transfers development rights to a builder: taxable as capital gains in the year of project completion (post Section 45(5A), Finance Act 2017, for residential property JDAs).