The property sold, will get part of the amount in the subsequent year. Explanation of tax rules

answer: Tax liability in respect of transfer/sale of capital asset arises when title in the property is transferred. In determining the time when title to a property is transferred, the date of execution of the document and the nature of the document are important. The agreement of sale includes a promise to transfer the asset in future upon the satisfaction of certain terms and conditions contained in the agreement of sale. This document itself does not create any legal right or interest in the property for the buyer.

The transaction ends when all the terms and conditions stated in the Agreement of Sale are complied with. So in your case, the title in the property will pass when all the terms and conditions of the agreement are complied with and a proper sale deed will be executed.

The date of payment of consideration is not a relevant point to determine when the title in the property is given to the buyer. If both parties agree that payment of the entire sale consideration may be deferred to the future and still the title may be transferred to the buyer. Hence in your case since the agreement of sale has been executed which does not result in transfer of title in the property, liability of capital gains will arise only if the title in the property is transferred in future on fulfillment of all the conditions. Agreement for sale.

However, if the document executed by you with the buyer is a sale deed and not an agreement for sale mentioned by you, the title gets transferred to the date of execution of the sale deed, even if the full sale consideration is not received by you. , Since the title in the property is transferred during the financial year 2021-2022, the capital gain on the sale of this asset is generated during the financial year 2021-2022.

Balwant Jain is a Tax and Investment Specialist and can be reached at jainbalwant@gmail.com And @jainbalwant on Vitter.