Capital gain tax

Querist : Anonymous (Querist) 05 July 2010 This query is : Resolved
on the sale of 2 vacant plots for Rs.115 Lacs and after taking in to account the indexed cost of acquisition my Capital Gain works out to Rs.72 Lacs for the F.y.10-11. I have no house and buying a new flat for Rs 75 lacs in the F.Y.10-11.I would like to know my C.G.Tax liability and the amount to be invested in Bonds to avoid the C.G.Tax.

Thanks.
R.krishnaswamy.

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Vineet (Expert) 05 July 2010
As you are buying residential flat you will be eligible for exemption u/s 54F to the tune of Rs 46.95 Lakhs being proportionate LTCG in the ratio of New investment to net consideration.

So the remaining taxable LTCG is Rs 25.05 Lakhs on which you will have to pay Rs 5.16 Lakhs as LT Capital Gains Tax assuming you have income from other sources to match the minimum thrash-hold income (1.60 Lakhs in normal individual male cases).

If you want to save this tax, you will have to invest Rs 25.05 Lakhs in bonds specified in section 54EC.

A V Vishal (Expert) 05 July 2010
Any long-term capital gain arising to an individual or an HUF, from the transfer of any asset, other than a residential house, shall be exempt if the whole of the net consideration is utilised within a period of one year before or two years after the date of transfer for purchase, or within 3 years in construction, of a residential house.
If, however, only a part of net consideration is so utilised, the amount of exemption, assuming the figures supplied by you, the exemption under S.54F will be equal to:

Capital Gains * Cost of New Residential House
----------------------------------------
Amount of Net consideration

which works out to Rs.32,00,000/-.

LTCG : 7200000-3200000= 4000000

If the amount cannot be so utilised before filing the return, then in order to avail of the exemption, it may be deposited under the Capital Gains Accounts Scheme, 1998 before the due date for filing the return or in bonds u/s.54EC before 31st of March.