486. Calculation of holding period

of property for Capital Gains in India

Question: Dear Sir /Madam,

I am an NRI living in US . Please clarify me following points in regard of capital gain tax for property . I had booked a flat in my name on 18-08-2009 and sold out on 15-11-2012 . The holding period is more than 3 years . The flat was not registered in my name only there was agreement between me and builder which was done at the time of booking . Will this be considered as long term capital gain since period was more than 3 years. Please confirm. Regards Rashid Jamal Answer: If property is held for more than three years then long term capital gains apply. However the calculation of holding period does become a matter of debate in some cases. Can holding period be calculated from: • Date of singing of agreement to purchase • Date of registration or • Date of possession Rather than go into to complexities of this topic, I can offer my own opinion which is always subject to correction. 1. Simply signing an agreement to purchase and placing a deposit, does not confirm date of transfer/acquisition of immovable property. Consider also that there are times when a property may not be ready for several years after an agreement is signed. 2. Date of possession and registration dates can vary considerably. 3. Possession of a flat for instance, may have been given pending registration. I would think that the date of registration would have more significance when it comes to calculation of holding period for capital gains purposes. However, in cases where registration has not been done, the date of actual possession by the purchaser could be applied for calculation of holding period. Hence, the date of registration or the date of possession of property, which ever is earlier can be used. I suggest you check with a tax accountant in India.