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ltcg on residential property - a basic query


Dear Experts,

 

I have a basic query on LTCG on real estate. I know that it 20% with indexation. But what happens if the total income of the person (including LTCG) is within the income limits, before it is taxable?

 

Also does development charges (for calculation of LTCG) include the stamp-fee paid by the person during purchase?

 

Please clarify.

 

Regards,

Harsha Vardhana R

 
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Advocate

Dear, You can call CA Karan Chandna 9871563826 and discuss .... Regards Kapil Chandna Adv 9899011450

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Proprietor

CASE 1 NO TAX WILL BE PAYABLE 

BUT IN CASE THE TOTAL INCOME EXCEEDS THAN INCOME OVER AND ABOVE TAX SLAB WILL BE TAXABLE @ TAX RATE APPLICABLE

 

Particulars

Rs.

Full value of consideration (i.e., Sales consideration of asset)

XXXXX

Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, advertisement expenses, etc.)

(XXXXX)

Net sale consideration

XXXXX

Less: Indexed cost of acquisition (*)

(XXXXX)

Less: Indexed cost of improvement, if any (*)

(XXXXX)

Long-Term Capital Gain

XXXXX


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Thanks Varun!

 

OK. For case 1, it is very clear.

 

For case 2, I can take include stamp-duty along with sale-price as cost and then apply indexation from the date of purchase. Getting official proofs of brokerage etc are very tedious!  Of course, I can add official taxes paid etc as development charges.

 

Regards,

Harsha Vardhana R

 
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Expert Sirs,

I have purch. a Agl. Land in 2003, entered into Development Agreement in 2008, received position of my share in 2011-12 FY, when shall I pay my LTCG and what percentage shall I pay the tax.

 
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Advocate

I agree to the opinion given by Mr. Varun Mahajan. In addition you may consult a local tax consultant for further issues.


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Practicing Lawyer

Dear,

Your tax liability has been rightly calculated by Mr Varun Mahajan. I would like to add below:

1. All expenses incurred directly in connection with sale of Property are to be treated as transfer expenses and to be reduced from Sales Consideration to arrive at Net Sales Consideration.

2. All expenses/costs incurred in connection with purchase of property and/or toward improvement of property are cost and is to be treated as part of cost and indexed accordingly on the basis of their actual date of payments.

3. You are entitled to first set off your thresh hold limit against LTCG and pay flat 20% on balance LTCG for example if LTCG is 2.50 Lac or Less and there is no other Income no tax would be payable. If LTCG  is 3.00 Lac during current FY and No other income, Tax would be 20% of (3.00-2.50)=10000.00

4. Please further note that Deductions under chapter VIA are also not available from LTCG provided you do not have sufficient other income to claim deductions.

Thanks 


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Thank you Dear Chugh!  Your further clarifications on 'actual date' of costs for indexation for various development charges is very helpful. So stamping charges can be clubbed as the cost of the original property itself.

 

Regards,

Harsha Vardhana R

 
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