Tax on sale of flat

Querist : Anonymous (Querist) 07 July 2010 This query is : Resolved
I had purchased a flat in Jan 2007 for Rs 19.50 lacs and intend to sell it soon for which I will get approx Rs 31.00 lacs.How much amount do I have to reinvest in order to save tax. However, if I were to use the entire amount(sale consideration) as per my choice, than how much tax I would have to pay.Please advice.

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Vineet (Expert) 07 July 2010
The Cost Inflation Index for current year ie 2010-11 has not been notified but considering the past trend, if the same is aasumed to be 680 and CII of FY 2006-07 is 519. So the likey indexed cost of acquisition is Rs 25.55 Lakhs. Assuming there is no other cost, the long term capital gain shall be Rs 5.45 Lakhs on which capital gains tax of Rs 1.12 Lakhs shall be payable. (Again assuming you have regular income exceeding the minimum income not liable to tax).

You can save this tax by investing the above sum of Rs 5.45 Lakhs in a new residential house or notified bonds of REC or NHAI.

There may not be much benefit under new DTC as the index shall be based on 1-4-2000 prices but the tax rate shall be as per income slab which may or may not be benefitial to you. No exemption against capital gains tax is proposed under new DTC.

Raj Kumar Makkad (Expert) 07 July 2010
There is no reason to have any difference of opinion with expert Vineet on such issues.

Kumar Thadhani (Expert) 08 July 2010
Since the capital gains in the fiancial year 2010-11 and the assessment year will be 2011-12.First of all new cost of indexation expected w.e.f.1-4-2000 under Direct Tax Code which shall take place as on an w.e.f.1-4-2011 and onwards,however it is not definite the Direct Tax Code shall takes place.So, wait still it is finally proposed and passed by the legislature during this monsoon session ongoing. In the meantime your position is that as stated by expert Mr .Vineet.

Vineet (Expert) 08 July 2010
The new DTC even if effected from 1-4-2011 will not affect any income arising in FY 2010-11 which continues to be governed by Income Tax Act, 1961 as amended from time to time upto Finance Act, 2010. In fact rates for Advance tax and TDS applicable for FY 2011-12 have also been finalsed in Finance Act, 2010.

The Provisions of New Act will be applicable for all activities wef 1-4-2011 if at all.

soumitra basu (Expert) 05 August 2010
I agree with Vineet with a small correction that cost of inflation index for the financial year 2010-11 has been published.

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