Capital Gain Tax

Querist : Anonymous (Querist) 06 September 2010 This query is : Resolved
Dear Experts,

Recently (in Sep,10) I have sold my flat @ Rs 19 lacs which was bought in the June,1995 at the cost Rs 5 lacs.

My query is :-

1. How much tax I have to pay, if calcalculated with indexing method ?

2,How much tax I have to pay, if calcalculated with-out indexing method ?

3. Alternatively I can save whole Capital Gain Tax by Investing Rs 14 lacs (19-5)in bonds u/s 54ec.

Your expert opinion will be highly appreciated, please also guide me about advantages /disadvantages for section 54EC

Regards

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A V Vishal (Expert) 06 September 2010
WITH INDEXATION:

Long term Capital Gain = Sale Consideration = Rs.19,00,000 (-) CII = 711/281*Rs.500,000 = Rs.12,65,125 = Rs.6,34,875

Tax @ 20.6% on Rs.6,34,875 = Rs.1,30,785

WITHOUT INDEXATION:

Long term Capital Gain = Sale Consideration = Rs.19,00,000 (-) COST PRICE = Rs.500,000 = Rs.14,00,000

Tax @ 10.3% on Rs.14,00,000 = Rs.1,44,200.

To claim Section 54 EC following Conditions is to be satisfied:
Long Term Capital Asset Long term assets means any capital asset held by assessee for more than 3 Years.
If assesee has sold the Long term capital asset during the previous year and made a long term capital gain then he can invest money of capital gain in Capital gain bonds and can save tax on long term capital gain.
Assessee here means all type of assessees,like individual,firm company etc.
Amount to be invested in bonds is only capital gain not net consideration received on sale of long term capital asset
Amount exempted under this section will be amount of capital gain or amount invested in capital gain bond which ever is lower maximum up to 50Lakhs.

These Bonds Maturity Period is Three years
Capital gain bonds eligible under this section are now can be issued only by REC or NABARD
Bonds can not be pledged ,sold transfer before completion of three year from purchase of bonds ,and in case its transferred then amount capital gain exempted on investment in these bonds will be made taxable in that previous year as Long term capital gain .
Amount of capital gain should be invested in Capital gain bond within 6 Month from date of transfer/sale of capital asset

Querist : Anonymous (Querist) 07 September 2010
Dear Vishal

Thanks for your reply

Kindly also guide me :-

total sales consideration Rs 1900000 less (711/281*Rs.500,000) Rs.12,65,125 = Rs.6,34,875
It means, I have to invest Rs 6.35 say Rs 6.40 lacs to save Capital Gain Tax.

A V Vishal (Expert) 07 September 2010
Yes.

A V Vishal (Expert) 07 September 2010
Amount to be invested in bonds is only capital gain not net consideration received on sale of long term capital asset