Neutral impactCorporate Action
Flat sold 10 days after registration: How an allotment letter helped an NRI claim long-term capital gains tax benefits
Mint 1 hr ago·18 Oct 2026, 12:56 pm
The Income Tax Appellate Tribunal (ITAT) in Surat has ruled that the holding period for a property begins with the allotment letter, not the registration deed. This decision impacts Non-Resident Indians (NRIs) who sold a property after a long wait. By counting the allotment date as the start of ownership, the tax authority has allowed the seller to classify the sale as a long-term capital gain, which comes with a lower tax rate compared to short-term gains.
This ruling is significant for investors because it clarifies how to structure property sales to minimize tax liabilities. It emphasizes that the allotment document is a crucial piece of evidence for determining the holding period. For NRIs and domestic investors alike, this decision offers a clear pathway to optimize tax benefits by focusing on the correct documentation at the time of purchase.
Investors should review their property purchase documents to ensure they have the allotment letter. Going forward, keeping track of the allotment date is vital for calculating long-term capital gains. While this is a specific tax ruling, it serves as a reminder for all investors to maintain proper records to benefit from favorable tax treatments on asset sales.
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