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Question to accounting experts on capital gains in case of joint development agreement for a land owner

For taxation purposes cap gains will be calculated as

Gain = sale price of property - ( indexed cost of land + indexed cost of improvement )

Now my question is if I have agreement with builder for 50:50 sharing of built-up space then essentially I am losing my 50% of land to improve the property. Can I consider the 50% land cost as cost of improvement ?

Thanks for sharing your thoughts..

There is a lot of history to Mantri Serenity Project dating back to 2013 or around that time. I think you will start getting the context by visiting earlier pages in this thread itself and basic Google search.

Mantri Developers (promoted by Sushil Mantri) started some projects around that time - Lithos, Webcity, Energia, Serenity and could complete none of those. There are multiple ongoing cases against Mantri for fraud, illegal diversion of funds, defaulting payments to creditors. Sushil Mantri and his son were arrested in 2022 and they were fighting for bail in multiple cases. In 2023 April, Mantri Developers was admitted by NCLT for bankruptcy proceedings for defaulting on a 579 cr. loan from Indiabulls HFC.


In 2020 Mantri Developers got investment from "SWAMIH" investment fund.
SWAMIH Investment Fund is supported by SBICAP Ventures to complete stall properties. With SWAMIH funding Mantri has completed some blocks of Serenity and i hear they got OC for some towers.

The home buyers of Serenity went through a lot of a lot of distress.There are some buyers who are still in the lurch after suffering for 10 years.

My advise
1. Stay away from Mantri
2. If you MUST buy here, engage an experienced property lawyer/legal firm and do a through legal review
3. Talk to the existing owners of Serenity who have taken possession, I hear that there are teething issues with respect to the management of the completed sections of the property , amenities and other thing.

Since you are the proposed buyer i will mention the implications from the buyer's perspective.

1. Check the updated guidance value of the property. The government of KA has increased the guidance value from 1st Oct 2023.
2. Property or land transactions need to happen at or higher than the guidance value.
3. As per laws if you buy property at less than guidance value the difference between the guidance value and the buy price will be considered as your income from other sources and taxable in your hand.
4. Since the seller has engaged a CA, in all likelihood the seller is pricing it at just at guidance value for the "80 L" component.
5. Even if the white money component is equal to or more than guidance value, recommend that you insist on the whole amount to be put in the sale agreement.
6.This offer you better legal protection i.e. recourse for the full transaction value if things go wrong and dispute arises between buyer and seller
7. You can also reduce the capital gains tax when you or your legal heirs sell the property in the future.
8. This will avoid injecting black money into the system.


If you don't get this property, there are plenty of good options available in the resale market.

Instead of Mantri Serenity - you might want to consider Ennessen Centreo, around the corner. IT might be expensive but I am told the finish is good.

Interested to know the basis of your suggestion - personal visit/evaluation based? Asking as

1. It's still an under-construction (iirc only one block is ready)
2. Most of the reviews online are fake ones; the few (seemingly) real reviews give negative views

I'm not aware of the builder but that I guess is a gap only at my end.

Saw a few responses and questions on agreement value for Property vis a vis Government valuation.

Sharing my 2 cents from the little knowledge that I have basis a few transactions:
1. The greater of Government valuation or Agreement value is considered for calculating stamp duty and registration charges.
2. In cases where Agreement value is lower than Government valuation, then Government valuation is used for calculation of stamp duty and registration charges.

As a seller/buyer, government has no business in deciding the consideration that you are asking/paying for.
The Government authorities are interested in their share of the pie / revenue that they stand to gain for every property transaction.
Hence, they will always charge stamp duty and registration charges basis the higher of either Government Valuation or Agreement Value.

A seller is liable to pay Short/Long term Capital Gains tax while furnishing their tax returns basis the difference between his purchase cost vs selling price while accounting for indexation where applicable. In cases where seller insists on selling the property for higher than Government Valuation, but registering it for lower than agreed value and hence settling the difference in cash, they are simply trying to save their Income tax outgo. Ask them to take a hike if they do not agree to reasonable terms.

If a buyer agrees to the above request of the seller, he should be aware that when he decides to sell the property, his tax liability will also be calculated basis the above logic. Thereby, his tax liability might get unduly inflated since he will not be able to claim the benefit of the amount paid in cash while computing his purchase price.

Members with relevant legal / financial background / knowledge may kindly add value.

Yes, feel free to go ahead, but focus on Blocks 1 & 3 if you intend to buy. Please do your due diligence on the paper work. The negatives were from the earlier issues that the property went through, but now, as you've said, it has a lot of positives as well - the best being its strategic location. All amenities are functional.

This project has been in construction for long. No idea when will they hand over. While the sample flat looks superb, the carpet area is quite small as compared to Mantri Serenity

I assume that you have already paid a handsome amount (could be 90% of flat cost) to builder already. May be you are already paying the EMIs. I do not see any great bargain power in your hand in this stage.

Now out of curiosity:

- Lets assume that you don't find the construction quality good, what will you do? - Not take possession, fight with builder, invest your own money to improve some areas or sell the flat?

IMHO this question should be asked upfront or best to invest in reputed projects/builders/properties (who have track record of delivering good quality construction). That removes lot of headache later on. Although you may have to cough up little higher price for this USP.

When I took possession of my house, there were no leakages. However, next rainy season it was pouring water in my house. Instead of taking up with builder who would again do a shoddy job, I hired a water proofing guy who replaced few tiles in attached balcony and did some waterproofing. 40k spent. Not a single drop of water in a decade now.

I would suggest not to worry too much. Anything cosmetic in a house can be repaired, and every house demands certain upkeep to keep it in good state.

In a flat system, issue in flat next to you or above could cause leakage in your home. An expert will identify this and repair.

A common source of leakage is the attached balcony. If tiles have gaps, then water could seep underneath the tiles and inside your home. In my home I could feel that some tiles were cooler than others because they had water underneath.

Checklist for house inspection,

• No broken tiles, kitchen counter or basin counter.
• All plumbing fitment's like tap, showers etc. should work properly, without any leakage. No choking in WC. Flush and check. If there is fault in plumbing, then there is potential of leakage within the walls. Keep bathroom water running for some time and see that water drains out properly. In new construction there is always a possibility of chocking due to construction debris.
• Every electrical switch should work. Take a bulb and charger and try every outlet. RCCB and MCB should be tested. RCCB would typically have a trip button 'T' that is used to test it. Switch every MCB off and on.
• Doors and windows should open and shut properly. The door locks should be smooth and aligned. Sliding windows should lock properly. Every lock and key should be checked.
• Any paint damage should be finished properly
• If there is inverter, try switching off the power-supply and see the backup works.
• Check that in the allocated parking, you can park your car. In one of our flat’s, allocated parking was very tight, and we had to get it replaced.
• Get some tiles of bathrooms from builder and keep it for future. Hot water plumbing is known to crack tiles and might need replacement.

***Rent***
I am looking for a 1 or 2BHK apartment for rent near Electronic City Phase 2, Bangalore.

Requirements:
* car parking
* security
* 24hrs water

Budget: ~ 20K

Any suggestions?

All major apartments nearby Ph2 are quoting 30K+

Last time I posted similar requirement here 9 years ago, a bhpian helped me to find one. So trying my luck again!

Thanks in advance!

A question to all experts on the forum.

Recently, Reliance Jio had contacted us to lease out a terrace space for installing their 5G tower. Rental terms and a 10-month security deposit were agreed upon. However, on proceeding with the agreement, we saw a clause that stated that the agreement had a lock-in period of 10 years, and we as landlords do not have the right to terminate the agreement. This put us on the back foot. On conversing with an RJio official, he says that this term is a non-negotiable, and it is the same across all site agreements. Pardon my ignorance, but is it so? That during the entire agreement period, the landlord doesn't have any right to terminate the agreement even after providing a reasonable notice period? We have rented another building terrace for AirTel tower and it doesn't seem to have such clauses. Please advise!

Dear experts: Is my understanding correct that selling agricultural land does not incur capital tax gains if the land in question is located in rural area?
Do we need to get a certificate (or something like that from the relevant authorities) stating that the land in question was in rural area (in case tax man wants to know) ?

Did you get this changed/removed? I used to work in that industry nearly 15 years ago; back then there was no such clause with any of the operators (and back then there were 8+ of them active in the country, including the younger Ambani's telecom firm). In fact, every telecom operator had a crisis team to manage rogue landlords who would not allow access (or want to remove the tower infra) to the tower infra setup unless the rent was renegotiated or some other issue resolved. Intrigued to know if R/Jio is able to bully it's way on this aspect with landlords.

Here is a link to a detailed article: https://www.nobroker.in/blog/capital...cultural-land/

From the article:

Short answer to your question is there is no capital gains tax if the agri land is located in a rural area. What qualifies as agri land and rural/urban etc are well explained in the article.

There is no certificate or documentation needed to prove the land is in a rural area. As long as you can reasonably establish the area is rural if at all your IT Returns are audited and the question arises. This is based on my personal experience and my auditor's advice but please clarify with your own auditor.