CBDT issues SOP to track capital gains from JDAs, reports due Oct 31

CBDT has issued an SOP for field officers to track capital gains from JDAs using RERA data, cross-checking with ITRs and requiring reports to be submitted by October 31, 2025

The Central Board of Direct Taxes (CBDT) has issued a standard operating procedure (SOP) for assessing capital gains on joint development Agreements (JDAs) under Section 45(5A) of the Income Tax Act to plug revenue leakages in the real estate sector.

 

According to the office memorandum issued by the tax department on September 15, the SOP requires field officers to use Real Estate Regulatory Authority (RERA) portals to identify JDA projects, match them with income-tax return filings, and check disclosures in the capital gains schedule.

 

In cases of non-disclosure, notices will be issued under Section 131(1A) to seek explanations and supporting documents.

 

The SOP draws on practices adopted by the Kolkata investigation wing, which successfully used regulatory data and cross-verification with tax returns to detect cases of undisclosed gains. All directorates have been asked to implement the model nationwide and submit reports by October 31.

 

According to Vivek Jalan, partner with Tax Connect Advisory, the SOP requires the tax officer to download the ITR for the year in which the completion certificate was issued. This may lead to unnecessary summons, as the taxpayer might go for sale before that year also.

 

“Issuing summons in such genuine cases would be a problem as a summon is an investigative procedure and for genuine cases, investigative provisions should not be invoked. Therefore, it is suggested that rather than issuing summons, the IT department should first scrutinise all the returns from the date of the agreement to the date of completion and try to match with the agreement,” Jalan said.

 

“If at all enquiry is required, let it be done as a specific enquiry under section 143(3) or even reopening an assessment under section 148 and any other provision. This would be a better method in such cases,” he added.

 

A JDA typically involves a landowner transferring land to a builder in exchange for flats or monetary consideration. Such transactions are treated as a transfer of capital assets and attract capital gains tax. Before 2017, the liability arose when the agreement was signed, creating hardship for landowners who had not yet received flats or money. Section 45(5A), introduced through the Finance Act, 2017, shifted the tax incidence to the year when the project’s completion certificate is issued.