Hello, There is a payout form MahaRera after filing a complaint against the builder for delayed possession. Is this award received by me taxable in any way? Is it part of “income from other sources”?
The taxability of the amount received from MahaRERA mainly depends on the nature of the compensation received.
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If the amount is received as compensation for delay in possession or refund related to a property purchase, it may generally be treated as a capital receipt.
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However, if any portion includes interest compensation, that interest amount can be taxable under “Income from Other Sources.”
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The actual tax treatment also depends on whether the property was held as an investment or for business purposes.
It is advisable to review the agreement details and breakup of the amount received before filing the income tax return to ensure correct tax treatment.
Yes, The amount is indeed compensation for delayed possession from MahaREAT. It also has an interest component, since before the builder filed an appeal with the Tribunal against the MahaRERA order, he had to make a pre-deposit with the Tribunal and when his appeal was also dismissed by the Tribunal, I could withdraw the money. The interest is from when the builder deposited the money to when I could withdraw. . This is a residential flat in Panvel that was bought for investment purposes but is not rented. Could you please explicate how this will be taxed, if at all. Thank you
Hello, Can I expect a further reply on this please
Hello @Shama
The compensation received due to delay in possession would not be taxable under the Income tax act since it is in the nature of capital receipt and not revenue receipt. The interest received on that compensation would be taxable under the head “Income from other sources”.
Hope this helps !!