Joint development is an agreement between a landowner and a developer in which the developer constructs a residential building on the land owned by the landowner. It is a proposition in which the landowner gives his land to the developer who takes up the liability of construction, property development, approvals, promotion and launch using his means and measures.
Earlier, under this arrangement, the landowner was liable to pay capital gains tax even before he got the possession of the built-up property. But now, the Budget has improved the status of the landowner in the joint agreement. According to the Budget, it is proposed that when a joint development agreement is signed by the both the parties for the development of a project, capital gains will not be taxable till the certificate of completion of the entire property (or a part of it) is issued by the authority. Unlike before, capital gains would not be taxable at the time of signing the agreement which was a common issue faced by the landowners. They were paying from their pocket even before receiving any returns!
Apart from this, the stamp duty value of the landowner’s land along with any monetary consideration will be taken as the full value for the transfer of the property on the date on which the certification of completion is issued.
But as everything has exceptions, this benefit will not be applicable in the case where the landowner transfers his share in a project to another person before the certificate of completion is issued. In such cases, capital gains will be taxable according to the existing income tax provisions that is from the year in which the transfer was made.
