Income tax on long term capital gain

This query is : Resolved 
 

(Querist)
11 July 2018

Dear Experts,
I have purchased a house in August 2017 , cost of house was 22 lacs.to purchase house loan of 17 lacs taken by me from OBC. I have sale out a plot in February 2018 ,sale amount is 12 lacs which was purchased by me in 2010.purchased amount was 5 lacs.
I have deposited 12 lacs rupees for my home loan which I got after selling a plot.
My query is that I have to pay any tax or not for long term capital gain.
Thanks and regards
Raj


N.J.S.Rajkumar alias narasimha (Expert)
11 July 2018

" CA Club" of this same forum would be right forum to give you a perfect reply.

N.J.S.Rajkumar alias narasimha (Expert)
11 July 2018

You could see the details of "CA Club India ' Forum details below this Thread.

raj (Querist)
11 July 2018

Thanks Sir for your valuable reply
Regards
Raj

Ms.Usha Kapoor (Expert)
12 July 2018

I agree with Narasimha.

N.J.S.Rajkumar alias narasimha (Expert)
12 July 2018

Welcome Please ........................................

Ms.Usha Kapoor (Expert)
12 July 2018

I agree with Narasimha

N.J.S.Rajkumar alias narasimha (Expert)
12 July 2018

Presently the 7th person today to be agreed by Ms.Usha Kapoor is my self and before the end of the day there could be more than 100 posts even posted before 10 years would be agreed by Ms.Usha Kapoor. If she is kind enough atleast towards my self she should ignore my posts with out any meaningless agreeing.


Ms. Usha Kapoor,

What is your opinion on the latest post of Mr. NJS Rajkumar alias Narasimha? I hope, you would agree on that also, as now a days, instead of giving any legal advice, you have started only agreeing with the advice of anyone and everyone, even without knowing the subject matter.

Here you are missing the opportunity to provide a solution to the problem of the querist, as earlier you boasted that you were perfect in Income Tax matters.

However, Mr. NJS Rajkumar should be thankful to you, as you provided him a very good opportunity to make an additional post, may that be helpful to anyone or not. Is not he a thankless fellow to that extent, whereas earlier he used to be your staunch supporter in all of your wrong or right actions?
.

R.Ramachandran (Expert)
12 July 2018

Amount of Capital Gain = Sale Proceeds MINUS Expenditure (like Advertisement, Commission paid to Authorised Broker against valid receipt etc.) MINUS the Indexed Cost of Acquisition of the Asset.

Indexed Cost of Acquisition of the Asset can be worked out by following the formula:

A x 272 divided by 167. (Here "A" is the Purchase price in the Financial year 2010-11 (as you have not indicated the exact month in which the plot was purchased, but simply indicated that you purchased it in the year 2010, it is taken as F.Y. 2010-11 and the applicable index as 167. If the plot was purchased prior to March 2010, then you have to apply the index of 148 instead of 167.) + Stamp Duty + Registration charges paid at the time of purchase; 272 is the Index for property sold in the year 2017-18; and 167 is the base index value in the year 2010-11.)

Thus, in your case, the Indexed cost of Acquisition of the plot would be: Rs. 5,00,000 x 272 divided by 167 = Rs. 8,14,371/-
(to the Rs. 5 lakh you can add the stamp duty + Registration charges paid)

Long term capital gain = 12,00,000/- MINUS Expenses incurred if any MINUS Rs. 8,14,371/- = Rs. 3,85,629/- say 3,85,630/-
(from Rs. 12 lakhs, you can deduct the brokerage or other expenses like Advt. etc., incurred provided you have proper Receipt)

Capital Gains Tax = 20% of 3,85,630/- which comes to Rs. 77,126/-

By adopting any one of the following methods the payment of Capital Gains Tax can be avoided.

(1) By purchasing a new property for a value which is not less than Rs. 3,85,630/- within 2 years from the date of sale, or within 1 year prior to Sale.

(2) By taking National High Way Authority Bond for the entire amount of 3,85,630/- for 5 years. The Bond will give 5.75% interest, but the interest is taxable. In case no new property is purchased, the Bond method is most advisable, as in this method, even though the interest rate of 5.75% is less than the normal rate of interest, still since the amount of Rs. 77,126/- is not being spent but being invested, the ultimate amount that will remain in hand after 5 years is higher compared to Rs. 3,08,504/- (3,85,630/- minus 77,126/-)


Ms.Usha Kapoor (Expert)
15 July 2018

I was quitting and busy with my ranking work.That's why I' was unable to give detailed replies to expert queries.

On and Off get Tax Cases also;+Same clients coming . fr\om Gujarat etc.;Unless I do quality w9rk they wont come again.. can do IT Query could do but THAT COST INFLATION ndex Tables ETC I'LL HAVE T9 SEE. iM NOT N A MOOD TO DO,


What a lame excuse of Ms. Usha Kapoor, while legal expertise seems to be out of her reach! She believes in achieving rank by agreeing even with quacks, as if that can prove her to be an expert. That way, she can only prove herself as one of the several quacks making only vague, misleading and irrelevant posts on the site.

Anyway, with the best of luck for her.



Ms.Usha Kapoor (Expert)
16 July 2018

Mr.Ramachandran,
If capital Gain s less than new house no tax is levied.If it s more we can claim section 54 54 EC, 54F etc deductions or exemptions.
You reported our capital Gain is Rs, 385630.It is less than the cost of new House Rs.22 lacs. Hence no tax is levied.According to section 54 of It act If capital gain s less than new house your entire capital gain is exempt from tax. According to section 54 if capital ga8n is less than new house entire cost of house is exempt. However this exemption is available to one Residential House only.Rest is OK.

R.Ramachandran (Expert)
17 July 2018

@Usha Kapoor: I have already said so in while mentioning the method by which capital gains tax can be avoided. See point (1) of my reply.

Point (2) is by way of further explaining the benefit of putting the money in NHAI even though the interest rate is low at 5.75% for those who cannot buy new property.

According to you, If capital Gain is more than the new house, one can claim section 54 54 EC, 54F etc deductions or exemptions.

I am sorry, both the benefits i.e. cost of the new house + benefit under 54EC etc., are not available. If the capital gain is more than the cost of the new house, then to the extent of capital gain one has no option than to pay Capital Gains tax on the excess amount of capital gains. (i.e. Capital Gains minus Cost of the new house= unabsorbed/unutilised amount of capital gain)

Ms.Usha Kapoor (Expert)
17 July 2018

What i wrote is 100% correct. You read section 54 asgain.if the capital gain is less than the costof new house entire house is exempt from tax.since 1st time you are doing it you may be confused.If capital gain is less than the new house also entire capital gain is exempt. This facility is available upto one Residential House only.Income Tax clients come to ,my house again and again. unless I do them correctly Why they should return.From Gujarat last year 1 gentle man came regarding capital gain.tax. Recently he came again.That means he is satisfied.If somebody who knows everything and wise we needn't teach him again any thing.If somebody who knows nothing we can teach teach him every thing. He wouldn't refuse to learn.People like you who are mediocre we can;'t teach hm anything.In the initial days of Joining I answered some Income tax queries answered and got thanks also.I thoroughly searched Forum queries for these IT queries. They are missing.For your answer it is Damn wrong. No tax is le viable. It is covered by exemption under section 54.You should have guts to admit.

Ms.Usha Kapoor (Expert)
17 July 2018

Whatever trash you wan ted to write You put it there.
Read the latest Income Tax book.

Ms.Usha Kapoor (Expert)
17 July 2018

Mr.Ramaqchandran,
If you've doubt ask any CA club expert regarding my answer to them and the veracity of it and also your answer.

R.Ramachandran (Expert)
17 July 2018

@Ms.Usha Kapoor:

It is you who are thoroughly confused. While Agreeing with you that if the cost of the asset purchased is much more than the amount of capital gains, then one need not pay any capital gains tax. This is so clear from at point (1) of my reply. What I had said was as under:

By adopting any one of the following methods the payment of Capital Gains Tax can be avoided.
(1) By purchasing a new property for a value which is not less than Rs. 3,85,630/- within 2 years from the date of sale, or within 1 year prior to Sale.

In the instant case, the querist has purchased the house whose cost is greater than Rs. 385630/- Obviously, he has no liability to pay capital gains tax.

Therefore, where is the difference in what I said and that what you say??

I think that you have some preconceived notion that my answer is wrong and that I have advised the querist that he has to pay capital gains tax.

It is your thinking that I am doing the Capital Gains calculation for the first time. If you think so, continue to think and please yourselves. I have no hassles.

In fact, I also pointed out to you that once the benefit of cost of acquired asset is set off against the capital gains, and if there is any capital gain portion is left uncovered (if the cost of new asset is less than the amount of capital gain), then in that case again one cannot adopt any other saving method like taking Bond etc.

It is you who wanted the querist to consult a CA Club. Not me. I have no intentions of contacting them, when I am clear.

Ms.Usha Kapoor (Expert)
17 July 2018

OK!Mr.Ramachandran!OK! I' think I'm sure you have changed the answer. You said 54 benefits and without tax they won't come together.That is erased in your answer. Regarding tax also you modified to suit my answer.If I commit wrong I admit. You people are not like that. Even Dhingraji is better, On two occasions he admitted his wrong and gave me thanks.Without giving any credit to me you changed the answer.

Ms.Usha Kapoor (Expert)
18 July 2018

I concluded that You don't know much tax.

Ms.Usha Kapoor (Expert)
20 July 2018

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Ms.Usha Kapoor (Expert)
21 July 2018

Even now your advice is partly wrong.Under section 54(1)Section 54 Section 54F
To claim full exemption the entire capital gains have to be invested..
one more thing. You are coming again and again to check your answer and my suggestions. That shows you changed the answer and again and again Changing the answer.

Ms.Usha Kapoor (Expert)
21 July 2018

Capital Gains Tax Exemption:
• Agricultural land in rural area in India is not considered as a capital asset and therefore no capital gains will be applicable on its sale.
• You will not be taxed if you use the entire sale proceed of your capital asset to buy a house property. You must satisfy the following conditions to avail exemption under Section 54F:
• You will have to purchase a house in 1 year before or 2 years after the sale.
• Under construction properties must be completed within 3 years from the date of transfer of the original house.
• You will not sell the house within 3 years of the purchase or construction.
• The new house must be situated in India.
• You must not own more than 1 residential house other than the new one on the date of transfer.
• You do not purchase a new house apart from the new one within 2 years or construct a residential house within a period of 3 years.
When you satisfy these conditions and when you invest the entire sale proceeds towards the new house, you won’t have to pay any tax on the capital gain.



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