Capital gain tax exeption

As you mention in above case  sale of residential house  property  falls u/s 54 of captial gain & you can get  exemption from captil gain if you invest  gain amount which came around Rs 18.00 lac in purchase of residential house with in 2 years of tranfer of assets or incase of construction  within 3 years from transfer.

[I have puchased the flat with loan. I have paid around 15 L to the bank (Interest + principle).

Still loan to be paid 12L (principle).

Monthly maintanace of teh property 2K i.e. 24K/annum. So 6 years = 1.44L. THESE FACTS ARE NOT RELEVANT.]

Assessment Year: 2014-15

Status: Individual ( Born on/after 1st April 1954, ie;  not aged 60 years on any day in the Previous Year)

                - Resident & Ordinarily Resident

Sale Price: -----------------------------------------------------------  Rs 50,00,000 ( Note: The Buyer will effect TDS under S.194(IA)

Cost: Rs 20,00,000 (purchased in 2007-08?)

Indexed Cost:20,00,000 x 939/551                                       = 34,08,348

Balance, Long Term Capital Gains:                                        Rs 15,91,652

less: Basic Exemption (if you have no other income):                 2,00,000

TOTAL INCOME: ---------------------------------------------------- Rs 13,91,652

Capital Gains Tax thereon, under S.112  ------------------------------------------------ @ 20%: Rs 2,78,330

less: Deduction under S. 87A ( not available as your Total Income exceeds Rs 5 lakhs):            -- --0----

Add: Edl Cesses, @ 3%: 8349.90 = --------------------------------------------------------------------------8,350

Total Tax Payable----------------------------------------------------------------------------------------:Rs 2,86,680

QUERY-2: Can I get capital gain tax exemption by byuing agricultural land from the money I get from sell of residential apartment: No. 

Thank you sir Rajagopalan. The was a very helpful reply.

Hi Sir Rajagopalan and others,

I have one more question regarding CG tax on sale of house. IF I am paying an Interest of 1.5 lakhs p.a. on the loan for a house and I sell it, do I get to show any loss on the house as I am paying Interest on the loan? Is this correct - I am in 10% tax bracket, hence a Interest of 15. L on house will save me 15k per year in terms of tax, hence my loss from the property is 1.5 L - 15k = 1.35 L per year.

Thanks in advance,

Anasua

Your Query: "IF I am paying an Interest of 1.5 lakhs p.a. on the loan for a house and I sell it, do I get to show any loss on the house as I am paying Interest on the loan? Is this correct - I am in 10% tax bracket, hence a Interest of 15. L on house will save me 15k per year in terms of tax, hence my loss from the property is 1.5 L - 15k = 1.35 L per year."

Reply: The Housing Loan interest you pay will be reckoned in the computation of only your income from House Property under S.24(b) of the income Tax Act 1961, and not in the computation of the Capital Gains from its sale.

If other stipulated conditions are satisfied in your case, a housing loan interest of Rs 1.5 lakhs, may save you Rs 15,000 in income tax every year. To give a firm reply, the full particulars of your income, such as whether the house is self-occupied or whether it is let out etc, are required. 

Hi Sir Rajagopalan,

Thank you for the quick response. The house is self-occupied and I have check with tax calculators, The interest saves me 10% on the tax, meaning 1.5L saves me 15k per year on tax. As i understand from you now, the 1.35L (1.5L to bank - 15K saved in IT) which I shell out to the bank every year is not going to counted in any way to determine if there is any loss from the property. Please confirm if my understanding is correct.

Thanks again,

Anasua

Your Query:  The 1.35L (1.5L to bank - 15K saved in IT) which I shell out to the bank every year is not going to counted in any way to determine if there is any loss from the property. Please confirm if my understanding is correct.

Reply: Your understanding is correct.

The interest amount you pay on the housing loan is deductible in the computation of the Income from the House Property, of the respective year,

but not in the computation of the Capital Gains from the sale of the house property.