Cost of Acquisition – Pre-2001 Rule Applies

Since the property was acquired in 1979 (well before 1 April 2001), the law allows you to compute cost of acquisition as whichever is higher: your actual purchase price, or the fair market value (FMV) as on 1 April 2001, subject to the stamp duty value (SDV) as on 1 April 2001. That means you benefit by using the higher of these two.

Indexation Benefit Withdrawn for NRIs

Under the old regime (for transfers ‎before 23 July 2024) long-term capital gains (LTCG) from property were taxed at 20% with indexation benefit (adjusting the cost for inflation).
But as per the Finance (No. 2) Act, 2024 (and related amendments) for non-residents selling property on or after 23 July 2024, indexation benefit is not available, and a lower tax rate of 12.5% (plus surcharge/cess) applies.
Resident individuals and HUFs who acquired before 23 July 2024 have an option (choose 20% with indexation or 12.5% without) but that option is not available to NRIs.

How Your Taxable Gain Will Be Computed

Given you’re a non-resident and selling now (assumed on or after 23 July 2024), the computation will be:

• Sale Consideration (less any transfer expenses)
• Less: Cost of Acquisition (by the rule above)
• Less: Cost of Improvement (if any)
• The result = Long-Term Capital Gain (LTCG)
• Tax at 12.5% + surcharge + cess

There’s no indexation for you under the law as NRI.

Example (Illustrative)

Suppose:

• Purchase in 1979 at ₹ 1 lakh
• FMV on 1 April 2001 = ₹ 10 lakh
• SDV on 1 April 2001 = ₹ 11 lakh
  -> You pick ₹ 10 lakh as cost of acquisition (higher of 1 lakh or 10 lakh, still ≤ SDV)
• You sell in 2025 at ₹ 1.20 crore
• Transfer expenses ₹ 2 lakh
  -> Net sale ₹ 1.18 crore
  -> LTCG = ₹ 1.18 crore − ₹ 10 lakh = ₹ 1.08 crore
  -> Tax at 12.5% ≈ ₹ 13.5 lakh (+ surcharge + cess)

Key Practical Points

• Ensure you determine correct cost of acquisition (actual purchase vs FMV-2001) and have documentation.
• Check whether any cost of improvement or transfer expenses exist and are documented.
• The date of transfer/sale is critical – after 23 July 2024 triggers the 12.5% regime without indexation.
• The buyer must deduct TDS under Section 195 at the appropriate rate.
• If you reinvest and look for exemptions under Sections 54/54F/54EC, check NRI eligibility and conditions.

Summary

Because you’re an NRI, property bought in 1979, selling now: you cannot apply indexation. Cost will be actual purchase price or FMV‐2001 (whichever higher and ≤ SDV-2001). LTCG will be taxed at 12.5% (plus surcharge & cess) if sale is on/after 23 July 2024.

✅ Verified.RealEstate’s Take

For NRIs selling long-held properties, Verified.RealEstate simplifies the entire process — from property verification, buyer coordination, and escrow handling to legal documentation and sale execution. Their NRI property management service also covers maintenance, compliance, and remote oversight until sale completion.

They assist in gathering documents like the 1979 purchase deed and 2001 FMV records, ensuring the sale and tax calculation (LTCG at 12.5%) are accurate and compliant. While Verified.RealEstate handles the real-estate side — due diligence, marketing, and secure transfer — NRIs must still consult tax professionals for return filing and exemption claims under Sections 54/54EC.

Sections 54, 54F, and 54EC of the Income Tax Act allow you to reduce or avoid capital gains tax if you reinvest your sale proceeds —
54 / 54F: by buying within 2 years or constructing a new residential property within 3 years,
54EC: by investing in specified government bonds (like NHAI or REC) within 6 months of sale.

Delayed property possession remains one of the most common challenges faced by homebuyers in India. This issue arises from a mix of operational, legal, and financial difficulties that builders face. By understanding these causes, buyers can better evaluate risks before investing in a project.

Common Reasons for Delays in Possession

1. Regulatory and Approval Delays

Projects often face significant slowdowns due to pending environmental clearances, local government permissions, or policy changes. Since approval processes are time-consuming, they can disrupt construction schedules and delay possession for buyers.

2. Contractual Disputes

Disagreements between builders and contractors or subcontractors can stall construction activities. These disputes may involve extended negotiations or litigation, leading to indefinite project delays.

3. Financial Mismanagement by Builders

Cash flow issues and fund diversion from one project to another can cripple a builder’s ability to complete construction on time. Buyers are often the ones who suffer when builders face financial instability.

4. Land Disputes or Litigation

Ownership disputes or legal battles over the project land can completely halt construction and push possession dates indefinitely.

5. Market and Demand Slowdowns

In times of low sales or market downturns, builders may face difficulty in funding ongoing projects, delaying their completion.

6. Force Majeure (Unforeseen Events)

Events like pandemics, natural disasters, or political instability can create unavoidable delays, further pushing project timelines.

Impact of Delayed Possession on Homebuyers

1. Financial Burden

When projects are delayed, homebuyers often bear the brunt of double financial pressure—paying rent and EMIs simultaneously. Prolonged delays may also force buyers to extend loan tenure, increasing interest costs.

2. Emotional and Lifestyle Stress

Major life plans such as moving, children’s education, or marriage arrangements may be disrupted. Lack of communication from developers during extended delays adds to buyers’ mental stress and uncertainty.

3. Loss of Property Appreciation and Tax Benefits

Delayed possession means buyers miss out on tax deductions available on timely loan repayments and ownership. They also lose the opportunity to rent out or resell the property at a profit.

4. Legal and Logistical Difficulties

Buyers are often forced to take legal action against developers, a time-consuming and expensive process. Juggling court proceedings while managing finances and personal obligations creates additional strain.

Impact of Delayed Possession on Builders

1. Loss of Credibility

Extended delays harm the builder’s reputation, making it harder to gain buyer trust and attract new projects.

2. Rising Project Costs

Prolonged timelines increase costs due to higher material prices, labor charges, and interest on loans.

3. Legal Penalties under RERA

Builders may face penalties such as interest payouts to buyers, fines up to 10% of project cost, or even imprisonment.

4. Cash Flow Issues

Unsold inventory and delayed payments lock up capital, further affecting ongoing construction and operations.

How Buyers Can Safeguard Themselves

1. Check Builder-Buyer Agreement: Ensure that the project delivery date and penalty clauses for delays are clearly mentioned.
2. Verify Regulatory Approvals: Confirm that the project has all required clearances before booking.
3. Review Builder’s Financial Health: Reputed builders with a good track record are less likely to default or delay.
4. Use Platforms like Verified.RealEstate: We provide RERA Compliance Checks, Agreement Reviews, and Legal Verification Services to ensure your investment is safe before you book a property

Steps Builders Can Take to Avoid Delays

1. Plan Realistically: Set achievable project timelines and include a buffer period for unforeseen events.
2. Secure Approvals Early: Obtain all regulatory clearances and RERA registration before commencing work.
3. Maintain Financial Discipline: Avoid fund diversion and maintain separate accounts for each project to ensure consistent cash flow.
4. Strengthen Contracts: Have clear agreements with contractors, suppliers, and landowners to minimize disputes.
5. Communicate Transparently: Provide regular project updates to buyers to build trust and reduce reputational risk.

🔑 Why the Change Was Long Overdue

The existing Karnataka Apartment Ownership Act, dating back to the 1970s, no longer meets the needs of a fast-growing, urbanized state where high-rise living is now the norm—especially in Bengaluru. Buyers often found themselves at the mercy of ambiguous laws, poorly managed associations, and limited legal recourse.

The new legislation aligns with the Real Estate (Regulation and Development) Act, 2016 (RERA), making it legally robust and uniform across projects. For property buyers, this means greater transparency, accountability, and protection.

🏢 Major Reforms Under the New Law

• RERA-Based Governance: Associations and builder obligations will now fall under the RERA umbrella, offering standardized protection.
• Mandatory Formation of Resident Welfare Associations (RWAs).: Builders must facilitate the formation and registration of RWAs once 60% of units are sold.
• Financial Transparency: RWAs will be required to maintain audited accounts and disclose usage of maintenance and sinking funds.
• Defined Builder Exit Protocol: Builders must transfer control of the project—including documents and common areas—upon completion, reducing delays and disputes.
• Digital Documentation: All apartment-related records must be accessible digitally for increased clarity and reduced fraud.

🌆 A Boon for Bengaluru’s Vertical Living Spaces

In Bengaluru—home to thousands of apartment complexes—residents have long struggled with erratic builder handovers, unregistered associations, and opaque maintenance charges. The new law is expected to:

• Minimize legal disputes
• Empower apartment owners to self-govern
• Encourage developers to be more accountable

It could also help reduce project delays and improve the post-occupancy experience for homebuyers—a major pain point in India’s urban housing scene.

📈 Impact on Real Estate Stakeholders

For Buyers: More confidence, fewer hidden costs, legal empowerment.
For Developers: A push toward compliance and structured handovers.
For RWAs: Legal recognition, defined roles, and financial legitimacy.

💬 What the Deputy CM Said

Deputy CM D.K. Shivakumar called this reform a “people-first legal reset,” highlighting that the bill was developed with extensive stakeholder consultation—including builders, RWAs, and civil society groups.

The proposed legislation is currently awaiting final approval and will likely be implemented with amended model bylaws across the state.

What Must Be Displayed on the Boards?

According to TNRERA member M. Krishnamoorthy, the boards must include the following essential information:

• Name of the promoter
• Project name
• TNRERA registration details
• Date of completion as per the TNRERA certificate
• TNRERA’s official website address

This step is grounded in the Real Estate (Regulation and Development) Act, 2016, reinforcing the requirement that buyers and investors must have easy access to validated project data.

Mandatory Specifications and Installation Guidelines

Promoters must install a minimum 2ft by 4ft board at a visible location that abuts the public road adjacent to the project site. This board must:

• Be separate from marketing or promotional signage
• Be clearly legible, using a readable font size
• Be installed immediately after receiving TNRERA registration

Additionally, developers must submit proof of installation — including site photographs and a certification by the project’s engineer or architect — to the authority.

Enforcement through Registration Documentation

TNRERA has confirmed that this signage requirement will now be formally included in Form-C, which is part of the project registration process. Compliance will be strictly enforced before the issuance of the completion report.

Expert’s Opinion

S. Ramprabhu, chairman of the DTCP committee at the Builders Association of India, welcomed the initiative, calling it a “step in the right direction” to promote buyer trust and transparency in the real estate ecosystem.