Let me tell you is corpus fund received on redevelopment taxable. When your flat is redeveloped and you receive a corpus fund from the builder, you might wonder: Is corpus fund received on redevelopment taxable? Firstly, a corpus fund paid as compensation or hardship allowance during redevelopment is regarded as a capital receipt, not taxable as income from salary or other sources.
Is a Redevelopment Corpus Taxable?
Courts including the Income Tax Appellate Tribunal (ITAT) have consistently held that such amounts are not income, since they're compensation for surrendering rights and hardship faced thus not taxable at receipt.
The corpus funds reduce your cost of acquisition and are only relevant when computing capital gains on eventual resale. Similarly, an ITAT ruling confirmed that hardship compensation during redevelopment is a capital receipt and not taxed under income sources.
However, if the corpus fund includes interest or returns, say you invest it or receive interest on it separately, those earnings are taxable under “Income from Other Sources”.
In contrast, monthly rental compensation paid by the builder for temporary relocation or accommodation is likewise often deemed a capital receipt, not a revenue income, provided it's genuinely compensation for hardship.
But rental payments must meet specific judicial criteria if not, they could be taxable as income from house property.
That said, if any amount is reimbursed beyond compensation (e.g., excess rent or brokerage not used for actual expenses), the excess may be taxable under Section 56, as “Income from Other Sources”.
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Is Corpus Fund Received on Redevelopment Taxable?
ravi
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2025-07-18T10:01:04+00:00 2025-07-18T10:01:06+00:00Comment
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