How to manage TDR compensation amount

Dear Sir,

TDR is not cash compensation for the land taken, but a right to develop a specified built-up area elsewhere.

If cash is paid in lieu of or in exchange for TDR, or if TDR is sold to a builder/developer later, capital gains tax may apply.


Even if association is unregistered, this route avoids sale and hence no capital gains arise.

Dear Client,
Transferable Development Rights(TDR) is a system that provides extra buildable space to landowners who give up their property for public use. Basically, it’s like a certificate that lets property owners either use this extra space themselves or sell it to someone else for a set price. Transferable Development Rights (TDR) represents the right to build additional construction on another property. Any amount received as compensation for the surrendered land, whether as a lump sum or through the sale of TDR, is generally treated as a capital gain and is subject to income tax. However, as there is no cost of acquisition of the asset transferred, there will be no liability to capital gains according to Section 45 of the Income Tax Act, 1961.. There are a number of legal precedents which support the view that there will be no capital gains on the transfer or sale of TDRs. Income Tax is a branch of law or legislation that eventually comes under the arena of Chartered Accountants and Tax Consultants, who have expertise and in-depth knowledge on the subject and may guide you properly to navigate the issue in the right way.