What is a "Specified Agreement"?

A "specified agreement" means a registered agreement in which a person owning land or building, or both, agrees to allow another person to develop a real estate project on such land or building in consideration of a share, being land or building or both, in such project — whether with or without payment of part of the consideration in cash.

In simple terms, this covers Joint Development Agreements (JDAs) where:

• A landowner allows a developer to build on their land
• The landowner receives a share in the developed property (with or without partial cash)
• Pure cash deals are excluded — JDA is applicable only where the part or full consideration is received in the form of a share in the property.

Key Provision: Section 67(14) — Capital Gains

The old Section 45(5A) of the Income-tax Act, 1961 is now Section 67(14) under the Income-tax Act, 2025.

JDA (Joint Development Agreement) — Capital gains are taxable in the year of the completion certificate; the stamp duty value of the share in the project constitutes the consideration.

Who Can Avail This Benefit?

The benefit of deferred tax is available only to an individual or Hindu Undivided Family (HUF) assessee and is not available to a partnership firm, an incorporated company or any other vehicle owning the land.

Conditions to be Satisfied

The key conditions are:

• Only Individuals and HUFs can use this provision — firms, companies, and other entities are excluded.
• The JDA must be registered.
• The arrangement must involve transfer of land or building in exchange for a share in the developed property or monetary consideration.

Timing of Capital Gains (Point of Taxation)

As per Section 67(14) (formerly Section 45(5A)), the capital asset in a JDA is considered transferred in the year when the competent authority issues the certificate of completion for the whole or part of the project. The competent authority refers to the body authorised under law to approve building plans.

Full Value of Consideration

The Full Value of Consideration (FVC) is based on the Stamp Duty Value (SDV) of the owner's project share on the completion certificate issuance date.

Exception — Early Transfer of Share

The provisions of sub-section (14) shall not apply if the person transfers his share in the project on or before the date of issue of the certificate of completion, and then the capital gains shall be deemed to be the income of the tax year of such transfer, and other provisions of the Act shall apply for determining the full value of consideration.

TDS Provisions: Section 393(1) [formerly Section 194-IC]

The provisions relating to TDS on payments under Joint Development Agreements have been restructured under the Income-tax Act, 2025. The earlier Section 194-IC of the Income-tax Act, 1961 is now covered under Section 393(1) [Table: Sl. No. 3(ii)], effective from 1st April 2026. The nature of payment covered is: "Payment on any consideration, not being consideration in kind, under the agreement referred to in section 67(14)."

Real estate developers must deduct 10% TDS on monetary payments made to landowners along with a share in the project. If the landowner's PAN is unavailable, the TDS rate increases to 20%.

Exemptions Available to the Landowner

If a property owner buys or pays for part of the redeveloped property (residential), they can claim an exemption under Sections 85 to 88 (equivalent to old Sections 54–54F) depending on the nature of such property.

Summary Table

Key Practical Points

1. No change in substance — the new Act is a structural reorganization; the core rules for JDA taxation remain the same.
2. Only registered JDAs qualify as "specified agreements."
3. Deferred taxation is the major benefit — landowners pay tax only when the completion certificate is received, not at the time of signing the JDA.
4. For companies/firms, capital gains remain taxable when the agreement is executed, since rights transfer at signing.