Do I have to pay Income Tax if a builder pays me 10 lakhs for redeveloping it?



Our society has decided to go for redevelopment of our building and a builder will pay us Rs. 10 lakhs and give a new flat each. The new flat will be given for possession only after 2-3 years. However the 10 lakhs is being paid to each of us in slabs. By Mar’10 I will receive close to 4 lakhs. Do I have to pay Income Tax or Capital Gains tax on this?

Do I have to pay Income Tax if a builder pays me 10 lakhs for redeveloping it?
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2 Replies to “Do I have to pay Income Tax if a builder pays me 10 lakhs for redeveloping it?”

  1. The builder is paying you this amount towards what?

    Since your property remains i.e. there is no transfer of property, you are not incurring any CGs.

    This income may be termed as ‘Income from Other Sources’.

    Add this to your Total Income.

    HMT


  2. Rs. 10 lakhs likely to be taxed but the nature and amount of tax will depend on the contract executed between society and the builder.





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