Neutral impactCorporate Action
Sold property but received money in instalments? ITAT explains when you must pay income tax on capital gains
Mint 34 min ago·7 Nov 2026, 5:16 pm
The Income Tax Appellate Tribunal (ITAT) recently clarified a common confusion for property sellers who receive payment in instalments. The tribunal ruled that a taxpayer must pay income tax on capital gains only in the financial year when the money is actually received, not necessarily when the sale agreement is signed. This decision helps investors avoid paying tax on future income that has not yet been credited to their bank accounts.
This ruling is significant because it protects taxpayers from the risk of double taxation. Previously, there was ambiguity regarding whether tax liability accrued at the time of the transfer or upon receipt of funds. By clarifying that tax is due only when the instalment is received, the ITAT provides clarity and reduces the administrative burden on investors managing long-term property sales.
Investors should now ensure that their tax planning aligns with the actual receipt of funds rather than the agreement date. It is crucial to maintain clear records of all instalments received and the dates of credit. Going forward, this precedent serves as a helpful guide for sellers to manage their cash flow and tax liabilities effectively.
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- Category: Corporate Action.
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