I have 2 properties one Residential and one commercial other than the third residential property where I live. Now Both the properties one Residential and one commercial are going for redevelopment, now.. is capital receipts or hardship compensation (i.e. Corpus Fund) and Transit Rent received from the developer fully Tax free??
The tax treatment of hardship compensation and transit rent depends on the terms of the redevelopment agreement and the nature of the payment. In several redevelopment cases, Indian tax authorities and tribunals have treated hardship compensation paid for temporary displacement as a capital receipt, which is generally not taxable as regular income. Similarly, amounts described as transit rent or rehabilitation compensation have also been held to be non-taxable in a number of redevelopment-related decisions, depending on the facts of the case. However, the wording of the agreement and the specific circumstances are important, so it’s advisable to consult a qualified tax professional before filing your return.