Moment guide · FY 2026-27

I am entering a joint development agreement for my land

When does capital gains trigger in a joint development agreement?

For a residential joint development agreement, your capital gains as landowner trigger in the year the project is completed (post-2017 amendment), with the stamp duty value of the units received treated as consideration. For commercial JDAs where the developer pays cash, the transfer happens on signing. The developer deducts 10% TDS under section 194-IC on cash payments and unit values, and your holding period for the units runs from the original land acquisition.

The #1 trap

Paying tax on the land value when the agreement is signed — for residential JDAs the gain is recognised only on project completion, with the stamp duty value of the units as the consideration. The other miss: the landowner's holding period for the units runs from the original land acquisition, so gains can still be long-term even though the units are received years later.

Sharma family, landowner in a residential JDA near Pune

The Sharma family owns a plot bought in 2015 for ₹40,00,000 and signs a residential JDA in 2023 with a developer who will build apartments. Under the 2017 amendment to section 45(5A), the capital gain on their transfer does not trigger on the signing date; it triggers in the year the project is completed or the occupation certificate is issued. The project completes in 2026, and the family receives three apartments plus ₹25,00,000 in cash. The stamp duty value of the three units on completion is ₹2,10,00,000. Their consideration under section 45(5A) is the stamp duty value of ₹2,10,00,000 plus the cash of ₹25,00,000, which is ₹2,35,00,000. The cost of acquisition is the ₹40,00,000 they paid for the land in 2015, because the units inherit the land's cost and holding period. The gain is ₹2,35,00,000 minus ₹40,00,000, which is ₹1,95,00,000, and because they held the land for more than 24 months, the entire gain is long-term capital gain taxed at 12.5% with no indexation after Finance Act 2024. The developer deducted 10% TDS under section 194-IC on the cash component of ₹25,00,000, which is ₹2,50,000, and on the value of units transferred, and the credits appear in the family's Form 26AS. If the JDA had been for a commercial project with only cash consideration, the gain would have triggered on the signing date instead. The family reports the gain in the year of completion and keeps the JDA, the completion certificate and the stamp duty valuations for the computation. A quick call with us dials in the final figure. The Sharma family also notes that if the JDA provides for the landowner to receive money from the developer before completion, that advance is taxed in the year of receipt under the section 45(5A) rules, and the final gain at completion is adjusted for it. If the project stalls and the family receives only the land back, the tax positions already taken must be revisited, which is why the JDA should define the default scenario. The family's holding period for the units runs from the land purchase in 2015, so even though they receive the units in 2026, a sale soon after completion is still long-term at 12.5%. A quick call with us dials in the final figure.