Legal Question in Real Estate Law in India

Dear Sir,

I seek clarification to my situation as below.

Situation:

I paid Rs. 15,000 to Shankar Maharaj CHS Ltd, Pune towards Plot of area 3000 sft in January 1985 and received the share certificate from the Society in July 1996.

Further, Rs. 16200 was paid towards land and development in October 2000

Further, Rs. 22,000 was paid towards land and development in August 2005

ie Total Rs. 53,200 paid to Society till now plus some monthly subscription and expense reimbursement from time to time.

The Society enters into a ReDevelopment Agreement (RDA) with Builder in November 2006 (Registered) wherein the land is valued @ Rs. 8.40Cr and Builder paid Rs. 11Lacs to the Society. For the balance amount (Rs. 8.6Cr less Rs. 11Lacs) they agreed to build 40% area for each Shareholder, free of costs.

Thereafter, under the above RDA, I have entered in to an Individual Agreement (IA) in February 2007 (Unregistered and only Notarised) with Builder for cashless delivery of a RowHouse (RH) of 1200 sft BU area.

The RH is now ready, Completion Certificate is expected in May 2012 and I shall take possession immediately thereafter, in May itself.

Questions:

Option 1:

I sale the RH in October 2012 vide Sale Deed w/o entering in to an Agreement to Sale, and since then, I have a possession of ready RH as against Plot, I am advised liability of Short Term Capital Gain tax of 30% for possession from May 2012 to October 2012.

Please guide me on minimising ST Capital Gain Tax in this case, considering possible indexation, long term holding of land (January 1985 to Feb 2007) , long term holding of RH Under Construction (Feb 2007 to April 2012), costing of land, construction costs (estimated) and cashless delivery of RH which will get me Rs. 75Lacs, as price in the proposed Sale Deed, which is to be stamped and registered against Ready Reckoner price of Rs. 63Lacs for the RH effective 1st January 2012.

When we go to register the proposed Sale Deed, will Registrar insist on payment of stamp duty on the construction costs for Individual Agreement of Feb 2007 although the RDA is showing construction cost as Rs. 8.60 less Rs. 11Lacs.

There is no mention of Service Tax and VAT in RDA and IA, so can Builder insist on payment of ST and VAT from me and at what point will it be applicable.

Option 2:

Suppose, I make Agreement to Sale (not Sale Deed) in April 2012 (to be stamped and registered), before taking possession and CC from PMC, and thereafter, Sale Deed in October 2012.

Will it be LTCG as I have sold Under Construction RH which came in to being with my IA of Feb 2012.

Will ST and VAT be applicable for this transaction.

Will 1% TDS be applicable and insisted by the Registrar from October 2012?

Option 3

Instead of saling the RH, I avail of the 35% Fungible FSI now available to to me to 'Add Value' to my RH and thereafter sale it to maximise gains.

Is 35% extra Fungible FSI available in Pune?

Can I cover ground floor open area vide Fungible entitlement as there is no balcony etc over there.

Grateful for your guidance on each of the above options to maximise our investment.

Best regards, Rohit Dalvi

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