• Nov
  • 30
  • 2011

Capital gains under Income Tax Act 1961

Any Income derived from a Capital asset movable or immovable is taxable under the head Capital Gains under Income Tax Act 1961. The Capital Gains have been divided in two parts under Income Tax Act 1961. One is short term capital gain and other is long term capital gain.
1.Short Term Capital Gains : If any taxpayer has sold a Capital asset within 36 months and Shares or securities within 12 months of its purchase then the gain arising out of its sales after deducting therefrom the expenses of sale(Commission etc) and the cost of acquisition and improvement is treated as short term capital gain and is included in the income of the taxpayer.

The deduction u/s 80C to 80U can be taken from the income from short term capital gain apart from the short term capital gain u/s111A

Taxability of short term capital gains: Section 111A of the Income tax Act provides that those equity shares or equity oriented funds which have been sold in a stock exchange and securities transaction tax is chargeable on such transaction of sale then the short term capital gain arising from such transaction will be chargeable to tax @10% upto assessment year 2008-09 and 15% from assessment year 2009-10 onwards.

The short term capital gains other than those u/s 111A shall be added to the income of the assessee and no such benefit is available on short term capital gains arising in other cases and they will be taxed normally at slab rates applicable to the assessee.

If an assessee does the business of selling and purchasing shares he cannot take advantage of section 111A or section 10(38). In this case income will be treated as business income.

Capital gains in case of depreciable assets : According to section 50 of Income tax act if an assessee has sold a capital asset forming part of block of assets (building, machinery etc) on which the depreciation has been allowed under Income Tax Act, the income arising from such capital asset is treated as short term capital gain.

Where some assets are left in block of assets: If a part of such capital asset forming part of a block of asset has been sold and after deducting the net consideration received from sale of such asset from the written down value of the block of such asset the written down value comes to NIL then the gain arising shall be treated as short term capital gain and in such case where written down value has become NIL no depreciation shall be available on such block of asset even if some assets are physically left in the block of assets.

When no assets are left in block of assets: If the whole of the capital assets forming part of a block of assets have been sold during a year and the assessee has suffered a loss after deducting the net sale consideration from the written down value of the block of assets then such loss shall be treated as short term capital loss and no depreciation shall be allowed from such block of assets.

It was decided by Chandigarh tribunal in (2004) 3 S.O.T. 521/ 83 T.T.J. 1057 if the whole of capital assets in a block have been sold in a year and some gain arises after the sale such gain shall not be treated as short term capital gain if some new asset has been purchased within the same year in the same block of assets and the total value of new and old capital assets in the same block is more than the sale consideration of the assets sold, since the block of asset does not cease to exist in such case as is required u/s 50(2). This can be explained with an example as below:

Written down value of 5 Machinery
as on 01-04-2010 Rs. 500000
5 machinery  sold on 01-05-2010 Rs. 600000
New Machinery purchased on 01-06-2010   Rs. 250000

now in above cases the difference between the w.d.v and sale value i.e Rs 100000 can not be treated as short term capital gain in the year 2010-01 since new machinery has been purchased in the same block of asset afterwards in the same year and the total of new and old machinery is more than the sale value of the machineries sold as a result the block of asset continue to exist.

Short term capital gain where land & building are sold together: Some times it happens that in a block of assets namely land & building, the whole of land & building is sold together. In such cases the capital gain on land and building should be calculated separately.

The Supreme Court has held in (1967) 65ITR 377 that depreciation is available on the value of building and not on the value of plot. Considering the above decision of Supreme Court, the Rajasthan High court in (1993)201 ITR 442 has held that Plot and building are different assets. If the assessee has purchased plot more than 3 years back and constructed building on it less than 3 years back then the gain arising on sale of plot shall be long term capital gain and the benefit of indexation shall be given on it whereas the gain arising on sale of building shall be short term capital gain and will be added to the income of the assessee. Therefore both should be calculated separately.

Where the plot has been purchased more than three years back and the building has been constructed on it less than 3 years back, it is advisable that in the sale deed the sale value of plot and building should be shown separately for more clarity and if the consolidated sale value of the Plot and building has been written in the sale deed then the valuation of plot and building should be done separately from a registered valuer.

Capital asset transferred by the partner to the partnership firm: As per section 45(3) of the Income Tax Act 1961 if any partner in a firm transfers his asset to the firm then the capital gain on such asset as arising to the partner shall be calculated by presuming the sale value of such asset as is shown in the books of accounts of the firm and not the market value of the asset.

whether such gain is treated as long term or short term will be decided as below:

a) If the depreciation has been claimed on the asset transferred to the firm then in view of section 50(2) the gain arising there from will be treated as short term capital gain.

b) If the partner has been the owner of the asset for more than 36 months and no depreciation has been claimed on it then the gain arising from such asset shall be treated as long term capital gain.

Capital gain in case of Dissolution of a Firm: As per section 45(4) of the Income Tax Act where any partnership firm or AOP or BOI is dissolved and the Capital assets of the such firm or AOP or BOI are transferred by way of distribution of assets to the partners at the time of Dissolution in such case the gain arising from such transfer to the partners will be treated as capital gain and the firm will be liable for paying tax on it in the year of distribution of the assets.

For the purpose of section 48 the fair market value of the asset on the date of such transfer shall be deemed to be the full value of the consideration received or accruing as a result of the transfer.

2. Long Term Capital Gain: A Capital Asset held for more than 36 months and 12 months in case of shares or securities is a long term capital asset and the gain arising therefrom is a long term capital gain. Long term capital gains are arrived at after deducting from the net sale consideration of the long term capital asset the indexed cost of acquisition and the indexed cost of improvement
of the asset.

The Central govt notifies cost inflation index for every year. The indexed cost of acquisition is calculated by multiplying the actual cost of acquisition with C.I.I of the year in which the capital asset is sold and divided by C.I.I of the year of purchase of capital asset. Similarly the indexed cost of improvement can be calculated by using the C.I.I of the year in which the capital asset is improved. Where the capital asset was acquired before the year 1981 then the cost of acquisition shall be the fair market value or the actual cost of its acquisition which ever is higher. The Fair market value of a capital asset can be known by the valuation of the registered valuer.

The cost inflation index table as notified is here below:

sCost Inflation Index Notified by the GOVTs
Financial Year (CII) Financial Year (CII)
1981-82 100 1999-2000 389
1982-83 109 2000-2001 406
1983-84 116 2001-2002 426
1984-85 125 2002-2003 447
1985-86 133 2003-2004 463
1986-87 140 2004-2005 480
1987-88 150 2005-2006 497
1987-88 150 2006-2007 519
1988-89 161 2007-2008 551
1989-90 172 2008-2009 582
1990-91 182 2009-2010 632
1991-92 199 2010-2011 711
1992-93 223 2011-2012 785
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351

If a capital asset has been subjected to depreciation then no indexation benefit is allowed on sale of such capital asset in view of section 50(2) as discussed above.

 

Capital gain from Plot and building should be separately calculated: As discussed above plot and building are separate assets and the capital gain on above should be calculated separately. If the plot is purchased more than 3 years back and building has been constructed within 3 years the capital gain on plot will be considered as long term and the capital gain on building will be treated as short term capital gain.

Taxation of Long term capital gains: The long term capital gains are taxed @ 20% after the benefit of indexation as discussed above. No deduction is allowed from the long term capital gains from section 80C to 80U. But in case of individual and HUF where the income is below the basic exempted limit the shortage in basic exemption limit is adjusted against the long term capital gains.

Section 112(1) provides that any capital gain arising from a long term capital asset being the listed securities which are sold outside the stock exchange the long term capital gain shall be calculated on such securities as below:

a) Tax arrived at @ 20% on such long term capital gain after indexation u/s 48 or
b) Tax arrived at @ 10 % on such long term capital gain without indexation
Whichever is less.

The long term capital gain on equity shares or units of equity oriented mutual fund which are sold in the stock exchange and on which securities transaction tax is paid, is exempt u/s 10(38).

Section 50C: Section 50C has been introduced with effect from 01-04-2003 and is a very important section while calculating capital gain on land & building. Section 50C provides that Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer.

It means that the capital gain will be calculated by considering the sale value of the capital asset as equal to the value adopted or assessed by the stamp valuation authority for that capital asset if the actual sale value is less than the value assessed by stamp valuation authority.

If the assessee claims that the value adopted by the stamp valuation authority exceeds the fair market value then the assessing officer may refer to the valuation officer for valuation of the fair market value of the asset. If the fair market value declared by the valuer is more than the value adopted or assessed or assessable by the stamp valuation authority, the value so adopted assessed or assessable by the stamp valuation authority will be taken as full value of consideration of the capital asset.

CBDT vide its circular No 8/2002 dt 27-08-2002 has declared that if the valuation officer has declared the fair market value of the capital asset less than the value adopted, assessed or assessable by the stamp valuation authority then the capital gain shall be calculated on the value so declared by the valuer.

After the adding of word assessable u/s 50C in 2009 now it has become clear that even those immovable properties in which no sale deed is entered into and which have been sold on a full and final agreement will be within the ambit of section 50C.


Exemptions
from long term capital gain:

Section Asset Assessee Holding Period of Original Assets Whether Reinvestment Necessary —Time Limit Other Conditions/Incidents Quantum
54 Residential House Property Individual HUF 3 years Yes — In Residential House, within 1 year before, or 2 years after the date of transfer (if purchased) or 3 years after the date of transfer (if constructed).** The amount of gains, or the cost of new asset, whichever is lower
54B Agricultural Land Individual Use for 2 years Yes — In Agricultural Land, within 2 years after the date of transfer. Must have been used by assessee or his
parents for agricultural
purposes
See Notes 1, 2 and 10
As above
54D Industrial Land or Building or any
right
therein
Any Assessee Use for 2 years Yes — In Industrial Land, Building, or any right therein within 3 years after the date of transfer. Must have been compulsorily acquired As above
54EC Any Long-term Capital Asset (LTCA) Any Assessee Shares, Listed Securities, Units of UTI/Mutual Fund covered u/s. 10(23D) :1 year Others : 3 years Yes — Whole or any part of capital gain in bonds redeemable after 3 years and issued on or after 1-4-2006 by NHAI or REC and notified by the Govt.
– within 6 months from the date of transfer.
The amount of gain or the cost of new asset whichever is lower subject to Rs. 50,00,000 per assessee during any financial year for investments made on or after 1-4-2007. Also investment in bonds notified before 1-4-2007 would be
subject to conditions laid down in
notification including limiting condi-
tions (i.e., Rs. 50 lakhs per assessee)
54ED LTCA being listed securities or units — do — Listed Securities or units of UTI/Mutual Fund covered u/s. 10(23D) : 1 year Yes — Within six months from the date of transfer in acquiring eligible issue of capital exemption is available only in respect of the assets transferred before 1-4-2006 — do —
54F Any Capital Asset (not being a residential house) Individual HUF Shares, Listed, Securities, Units of UTI/Mutual Fund covered u/s. 10(23D) : 1 year Others : 3 years Yes — In Residential House, within 1 year before, or 2 years after the date of transfer (if purchased), or 3 years after the date of transfer (if constructed).** If the cost of the specified asset is not less than Net Consideration of the original asset, the whole of the gains. If the cost of the specified asset is less than the Net Consider-ation, the proportionate amount of
the gains.
54G Industrial land or
building or
plant or
machinery
Any Assessee Yes— In similar assets and expenses on shifting of original asset, within 1 year before, or 3 years after the date of transfer. The amount of gains, or the aggregate cost of new asset and shifting expenses, whichever is lower.
54GA Industrial land or building or
plant or machinery
Any Assessee Yes — In similar assets and expenses on shifting of original assets to a Special Economic Zone – within 1 year before or 3 years after the date of transfer The amount of gains, or the aggregate cost of new asset and shifting expenses, whichever is lower
115F ‘Foreign Exchange
Asset’
(See Note 8 )
Non- Resident Indian Shares, Listed Securities, Units of UTI/Mutual Fund covered u/s.
10(23D) : 1 year
Others : 3 years
Yes— In ‘Specified Assets’ (See Note 9) or Specified Savings Certificates of Central Government, within 6 months after the date of transfer Same as u/s. 54F above.

Author:

Amit Bajaj Advocate

Email: amitbajajadvocate@hotmail.com

M: 9815243335


103 Responses to “Capital gains under Income Tax Act 1961”

  1. parinita jha says:

    sir,
    i have purchased L&NT share in the year 1995 of about 100 share of rs 10000 and i have sale the same 300 share including given dividend on dated 07/07/2014 through demat account of axis bank and i have got total 502500 in my saving account .
    so i want to know that is this 502500 is taxable ? according to my income.
    mo-09471000657.

  2. Vinod says:

    I was a non resident Indian for 6 years when I bought some debt and equity mutual funds in that country.  I am now a resident. I am told that long term capital gains from sale of equity mutual funds held abroad are not tax free as in the case of equity mutual funds held in India but that LTCG from sale of equity as well as debt funds can off set against long term capital losses if I have any. I do not have any long term capital losses.

    My question is whether I can apply cost indexation to the sale of equity and debt mutual funds held outside India.

    Vinod

  3. Daxesh Thakkar says:

    I have sold non agriculture land which was purchased by registered agreement on 2002, however sales deed executed on 2008 and it is sold on 2011. i have made land develop expenses during the period 2002 to 2008, my question is that land sold is covered under long term capital gain and or short term capital gain and claimed expenses incurred for land development and tenant vacating as cost improvement.

    Please give suggestion with detail with case laws.

  4. Princealexander says:

    I would like to know whether alimony is liable for capital gains

  5. sunil says:

    dear sirs, have sold a residential property for 70,00,000 (held since 2008 – sold in fy 2013-14). the cost of acquisition (including improvements and registration fees etc was 23,03,902). I have bought another residential flat for 60,00,000 during fy 2013-14. 1% tax was deposited as tds by the purchaser of my property and myself as buyer. can someone advice how should this be filled in ITR 2 so that I may fill the form correctly and (obviously) minimize the tax outflow. am a retired person only a pension to go by.
    I close with profuse thanks in advance. sincerely, sunil

  6. H.S.BHATIA says:

    MY QUERRY IS SAME AS THAT OF “NILESH”S.DATED 1.7.2011 AT 9.32 AM .ESPECIALLY THE CLARIFICATION PART MENTIONED THERE.PLEASE ALSO LET ME KNOW IF CAPITAL GAIN TAX CAN BE SAVED BY PURCHASING ONLY A PLOT AND NOT A HOUSE AFTER SELLING A HOUSE

    I WILL BE VERY GRATEFULL.

  7. RAHUL AGARWAL says:

    CAN LONG TERM CAPITAL GAIN FROM PROPERTY SET OFF WITH SHORT TERM CAPITAL LOSS??
    PLEASE REPLY

  8. Vinod Rana Ca says:

    If Motor Car Purchase in Partnership Firm all payment made by Firm, but Car RTO Registration in name of Partner – applicable Section 45(3) in The Income- Tax Act, 1995

  9. RENUKA says:

    WHAT IS THE TREATMENT OF CAPITAL SUBSIDY ACCOUDING TO INCOME TAX ACT 1961??

  10. vikesh Agrawal says:

    can A partner Whose have long term Capital gain, Purchases any assets in the name of firm which he is a partner to get exemption .?

  11. S N Das Advocate says:

    I have a query.pl let me know.Two brothers have jointly purchased immovable property.They have paid down payments from their own a/c equally.Loan from bank has also been approved in their joint names.EMI s will also be paid equally by both of them.Now let me know who will deduct TDS u/s 194IA and who will include income u/s 56(2).Also let me know does IT dept will treat the transaction as one by AOP,although there is no express indication in any document by both of the above assessees.

  12. Ram Seshan says:

    My query is, I have LTCG from equity shares all listed in the stock exchange, STT paid on all transactions. While section 112(1) provides for total exemption of tax US(10)38 on such LTCG, I do not find exclusive columns in IT returns form ITR-4. This seems clubbed with LTCG from all classes of assets, which is confusing. Shall appreciate if you will clarify if I should report under Schedule CG section B4 (a to e); B7, C, D1.

  13. Daksh says:

    What should be the date of acquisition in case of converted securities under the Act?

  14. Arjun says:

    Dear Sir,

    My father has sold out home and amount is received is liable for LTCG now we are planing to buy another home so can we purchase it on my name and my wife name not having fathers name in purchase home.
    Kindly reply.

    Thanks
    Ajun.

  15. SHAM LA says:

    Dear Sir,
    I have purchased a flat for Rs.30L, after selling the plot for Rs.25L in May 2010 after availing the LTCG tax banefits. The plot sold in 2010 was purchased in 2002 for Rs. 3L.
    I have made the full and final payment of above said flat in May 2010 but not sale deed has been made till date. I am having only the allotment from Builder. Now I am planning to sell the said flat, please confirm if the sale deed is must before selling or I can sell the same on Allotment basis. And what will be tax liabilities on me. The sale price now will be about Rs.40L.

  16. Joe says:

    if i gift an office premises to my son
    1. whether he has to pay stamp duty? if yes, how to calculate?
    2 how to get it transfrd to his name?
    3 can society take any objection?
    4 can society ask for any charges?
    5 what are tax implication? to me? to my son?
    6 what is the procedure to complete the transaction?
    7 any need to give advt on paper?
    8 what r tax implication if my son sells the property at a later date?

  17. Manan Shah says:

    I had purchased property on 17th April 2008 for 53,50,000/- with home loan of Rs.30,00,000/-, in joint names of my & my brother,

    We repaid full home loan in February 2013, & also will be selling the flat in March 2013 for 1,50,00,000/-

    What will be capital gain tax,

    The amount paid as interest on home loan will it be calculated in my income & not allowed as deductions for capital gain tax ?

    Please reply as soon as possible & help us in understanding the tax liability ,

    Regards

  18. anamika says:

    hi sir i have an ancestral property since 1935 we didn’t have any devidation in family still today even two generation has dead now we dispose off and consideration received has been distributed among all 15 members now like to ask you is it taxable for us or not? if yes then how we calculate capital gain?

  19. Ankit J Shah says:

    How taxation law shall be applied in case of LTCG tax when two properties were sold by individual and one property will be purchased in joint deed by that individuals?

    Please guide.

  20. Dhaval says:

    Dear All,

    There is a land on which a some grass and flowers are attached and small hunt also attached with it. is Flowers and hunts also termed as capital Gain? Give the Answer it should be appreciable…..

  21. Subhash K. says:

    Depreciated asset like office premises if sold after 3 years what will be tax implications. Whether LTG is applicable or sale value of depreciated assets will attract I.Tax @ 10% , 20% or 30%. To avoid tax sale value should be invested in which bonds?

  22. Hardik K Sanghani says:

    Hi,

    I have purchased a flat in Dec 2010 @ Rs 18,000,00 & sold it in Jul 2012 @ Rs 25,000,00.i.e short term capital gain of Rs 7,000,00.

    What is the timeframe in which I should by a new flat to avoid income tax ?

    What is the timeframe to invest in CGDAS & how should i go about ?

    If I deposit in CGDAS,can I withdraw the amt of 7,000,00 at one shot if I purchase a property in next 3-6 months ??

    Regards,
    Hardik K Sanghani (9833934997)

  23. N M PATEL says:

    if my value of holding is more than 8 lac in my demat account at any point of time then its taxable or not.what should i do to save tax.

  24. HASMUKH PATEL says:

    I had purchased residence worth Rs.7 lac, 7 or 8 years back which can
    earn more than 80 lac

    and other

    residence plot which I had purchased on 15.7.10 for Rs.2.25 lac which can
    yield me minimum 12 lac. both in my wife’s name on selling in 15 JULY,13.

    First of all, I have planned to SALE the plot which is in my wife’s
    name, and take a new house worth 27 lacs (15 lac from plot+12 lac new
    investment). Can I purchase that in my, wife or son name and avail the benefit of capital gain tax

    Now I tend to sell these both and purchase land and another house. Can I ?
    How much gain tax will I have to pay?
    Can I invest the return in my or son’s name??

    Moreover I had also booked TWO, 1 BHK, house for Rs.2.75 lacs, total
    5.50 lacs in 2008; but the builder failed to give possession or enter
    into sale deed till date. Now he seems to enter into sale deed on
    payment of my remaining Rs.1.25 lacs in next 2 to 4 months.
    Can I keep the name of my wife in these two 1 BHKs?

    Which date to be taken for long term capital gain tax – booking date
    or the date on which the SALE DEED is done.

    I shall be highly obliged to have your proper guidance.

    Thanks & Regards,

    HASMUKH PATEL

  25. Ashish says:

    I am selling my commercial office space within 15 months of purchase and I want to invest the the capital gain in the Project of Tourist cottages.
    I am building the cottages which will be used purely for the commercial purpose in 2 projects.
    -First Project land is owned by me.
    -Second Project land is taken on long lease by me.
    The land on which I am building the cottages is agriculture land.
    Can I claim the Capital gain investment or capital gain Tax will be applicable ?

  26. K. K.SHARMA says:

    My Father purchased a House property in 1969. He sold this House property in May 2012. can there is a Long Term Capital Gain. Pls. Advise me.

  27. Rajesh Narayanan says:

    We don’t remember nor have records of moneys spent on construction of house during 1989-90. How to calculate for purposes of LTCG? 

  28. Aziz says:

    Dear sir would like to have your opinion on the short term gain >>>>>as i sold my plot which was funded by hdfc for residential site..and have i to include the cost of interest or what are the other expenses can i book for aquisiation of the plot ..since before selling i had drilled a borewell, compund wall and misc expenese were incured kindly guide as to what is the best form and the taxation percentage..do note that the property was in both our names my wife and myself..

  29. neha says:

    I Have invested in mutual fund in sbi magnum Rs 25000 and had claim a deduction u/s 80c after 3 year i have redeemed and I have received 31507 what treatment to be done for this

  30. AVIK BASU says:

    I had obtained some ESOPs from our Company which I had purchased by paying the relevant FBT. Now I have sold the shares after 3 years and made some capital gains from it. The sale proceeds are credited in my salary account(with PAN attached) along with the capital gains. Will the sale proceeds required to be included as taxable income under long term capital gains tax.

  31. Shubham says:

    Assessee  have sold an agriculture land in  at Rs. 1500000. For the purpose of claiming exemption u/s 54b assessee have purchased Agriculture land on the name of his wife but  section 54 b exemption is not available in such  case. Anyone can suggest me that in which manner i can save my capital gain tax.. i m in trouble.. pls help me,,,,,,

    shubham.an.aspirant@gmail.com

  32. yES YOU HAVE TO SHOW THE SAME IN DETAILS OF EXEMPT INCOME

  33. janakiraman says:

    I have sold some shares held by me for 6 years.I understand that on LTCG where STT is paid ,such amounts are fully exempt from income tax .My question is whether it is necessary to show such LTCG IN my IT returns.
    Thanking you, Janakiraman

  34. sukhi says:

    whether u/s 111a, short etrm capital gain on sale of mutual funds (growth stt) to nri and amount is Rs 2 Lac and no other income then what will bw the minimum tax. At 15% or with slab rate. Please give remarks.

  35. Thiagu says:

    Our partnership firm was registered in 1972 and a 9 ground plot of land was purchased from SIDCO in Chennai in1972 at a cost Rs.30,928.50, has been shown in our balance sheet since 1972 till date, without any revaluation. Two years back we had entered into a joint development agreement and the Developer has built 6 floors, to be shared equally at 3 floors each. We have given them POA to sell the 50% undivided share of land out of the 9 grounds. They have since registered this undivided share of land to three parties at the guideline value of Rs.1,63,92,376 * 3 = Rs. 4,91,77,128 in the months of Aug, Sep & Nov 2011.

    Please let us know how best to reduce the incidence of Capital gains taxes payable by us.

    Regards,

  36. Jaiswal says:

    In year 2000, I had bought a residential-plot of land in an unauthorized colony in Delhi from the original owner (who got it from the colonizer) for Rs 275000/-. In that year the GPA was possible so I had got one done.
    There is a possibility of getting a price of 20,00,000/- for this plot (It still is an unauthorized colony – implies no registry/GPA).
    Now I have purchased a plot of land separately via Homeloan-for-residential-plot (Rs 17 lacs) in Jan 2011 in an authorized/approved colony in NCR.

    Query1: Will there be a LTCG on this plot? How much would it be?
    Query2: If I sell this plot of land in unauthorized colony for 30lac, can I use the proceeds to partially payoff my existing homeloan (for residential plot) of 17 lacs for the second plot?
    Query3: Also I intend to construct a house on the authorized plot by year 2014 end. Could I use the remaining amount against the same?

  37. shirish vora says:

    I rent residental property in mubai in 2008. Now due to redevelpoment I will own residental
    property (instead of rent). My question how to calculate the cost of property incase if I want to sale.
    Builder will complete construction (may be) in 2014. when can i sale property to consider to pay long term capital gain.

  38. pooja says:

    i have purchased industrial gala iin the year 1985, now i want to sell this gala and out of that amount, i would like to buy a residential flat. Do i need to pay capital gains tax on the sale proceeds of industrial gala….
    Reply ASAP

  39. Vani Gupta says:

    I have an old property that we are now collaborating with a builder to develop. 4 floors will be built and i will retain 3 and the builder will take 1. In lieu of these floors the builder will build the building at his expense and is giving us a sum of money on the execution of the agreement.

    Whether this sum of money will attract a LTCG at the time the 1 property given to the buider are registered?

    This would take about 1.5 years.

    How can i save my capital gain tax & what will be the Cost of Acquisition of that floor which i have to given to Builder?

  40. Ashok Munjial says:

    I had purhased shares during1992 when STT was not applicable. Ihave recently sold few shares,in some shares I earned profit & in few loss. Kindly advice the income tax applicablein this case. Pl. also advice income tax rules where STT has been paid

  41. vivek says:

    sir,

    i have a  commercial property in my  [HUF] firm purchased in 2005 and no other property in this firm. now i want to sale the same. kindly help me in knowing the tax implication on 3 situations :

    1]  I want to buy a bank rented residential property . 

    2] or residential property [vaccant]

    3] or if i buy commercial property.

    If i sale my property this year and i have some capital gain, what is the tax implication .

    kindly revert ASAP

    THANX

  42. Kishor says:

    I have a question regarding LTCG. I have piece of ancesstoral Land on which i constructed apartment and selling it as per bookings. in this i want to know how can i get deduction of land cost from my developing buisness recpt. pls clarify

  43. Srinithya says:

    For investing in Capital gain (54EC) bonds in Chennai, Please contact 9840288233

  44. sam says:

    Sir, iam planning to sell my ancestrial agricularal land, iam a non resident in the uk . i recieved the land as a gift (inhertitance) after my father died 5 years ago. What tax implications are their for me? and what is this 8km municiple ring or boundary should the land fall inside or out? rgards

  45. sandeep ahuja says:

    sir, if a person inherited some property like plot, resident house etc. then on sale of that proprty will that property comes under long term capital gain

  46. Venkat says:

    I have entered into an agreement for purchase of land and then for construction with a builder in March 2005. The builder was to deliver the flat by October 2008. His project got delayed. He had 23 towers to complete and he started delivering block by block since Sept. 2009. Though he has completed my residential block by 2010 end he has completed my flat in Oct. 2011 only and he hopes to handover this month. If i sell the flat at a rate higher than what i bought it will the capital gain be treated as Long term gain from house property as it is more than 3 years since the delivery was to take place and my payments have all been done ( except the deposits for utilities).

  47. Karthikeyan says:

    Hi,
    I have a query.. My father purchased a land for around 1Lac and with registraton 1.2Lac in the year 1998. Now he is planned to sell out the same and the value is Rs. 15.4 Lacs now. Now tell us will this considered to be a Capitalgain and attract 20% of Tax.

  48. ROHITKUMAR DESAI says:

    Recently I have sold a Flat, purchased in 1988. This amount totally (investment & gain) is paid to my home loan account(pre-payment), which was taken 2 years back from PSU bank .What will be tax implication for me.Is it need to mention in my next IT return ? I am salaried employee in PSU. Thanx

  49. Rajashekhar dasari says:

    U raised a good question… Normally it happens in the present days..
    I think the solution will be…
    If the indexed cost of acquisition of the house is 10lakhs… But the builder gave 8 lakhs as the compensation. Builder constructed 4 stores and retained 2 floors … So still u r owner for 2 floors… So the COA will be taken as proportionately… I mean to say… Amt received from the builder is the sale consideration and the cost of acquisition is deducted at a proportionate basis.. Here it is in 50:50 basis. So 50% of the cost of acquisition is taken while calculating capital gains…

  50. Rajashekhar dasari says:

    It is clearly stated in the definition of capital assets that whether the assets used in the business or not liable for capital gain except personal, movable assets.. So Oven also a capital asset.. And it is liable for short term capital gain because u may availed depreciation on it while calculating income from business..

  51. Rajashekhar dasari says:

    U can invest in only one house property u/s 54F.. And u have to invest the net sale consideration..

  52. RRG says:

    It was a depreciable asset.
    Falls under’PGOBP’.
    The sale price deductible from the wdv of the Block.

  53. ANKIT MAHESHWARI says:

    PLEASE GIVE ANSWER OF MY QUERY
    IF I SELL TWO LONG TERM CAPITAL ASSET OTHER THAN HOUSE AND PURCHASE A RESIDENTIAL HOUSE PROPERTY WHETHER I WILL BE ELEGIBLE DEDUCTION U/S 54F FOR CAPITAL GAIN AGAINST BOTH PROPERTIES WHICH I SOLD????

  54. deepika says:

    I thing its under the head P.G.B.P.

  55. sundeep says:

    suppose i have a hotel. ant income generated by selling food is taxed under income from business and professin. i buy an oven for my business . use it for 7 years and sold it . under which tax it is taxed?

  56. Ramesh says:

    Sir,

    My WDV of the block of assets are Rs.10,000 and i was sold the total block of assets for Rs.1800, still some worthless assets are in that block. During the year i bought new assets worth of Rs.25,000. Can you please tell me the tax treatment. Is this loss of Rs.10,000-Rs.1,800 = Rs.8,200 can be considered as STCG U/S 50 or is this business loss and also Please let me know the net block of asset value at the year end? Is Rs.25,000+Rs.8,200 = Rs. 33,200?
    PLease advise the full implication of this issue.

  57. umesh says:

    i want to sale my industrial property land and shed which was bought by me in the year 1995. shed was shown as depreciated in balance sheet during it returns.
    please advice me about capital gains both long term and short term.

  58. Nilesh says:

    Please let me know, if I have purchase a property in May 2007 and sold the same in Sep 2010 (after more than 3 year), So shall it will be consider as long term capital gain?

    Also required some clarification.

    1. As proof of purchase, I only have the allotment letter, this property was never register or agreement was created, So allotment letter can be consider and date of allotment as consider as date of purchase and whether it will be any issue, since I do not have any sale deed or registration not done?

  59. amandeep says:

    did you got the answer for your question yet..plz let me know how will d tax be calculated on ur case?

  60. VIJAY MATHUR says:

    Sir,

    In case somebody is having house on his land and after 32 years he went for collaboration agreement with the builder. builder is taking one floor and giving some amount to owner.presently it is two store house which builder will demolish and construct four store house.

    What will be the status of capital gain tax on the owner?

    Regards

    Vijay Mathur

  61. Raveesh Awasty says:

    We have an old property that we are now collaborating with a builder to develop. 4 floors will be built and we will reatin 2 and the builder will take 2. In lieu of these floors the builder will build the building at his expense and is giving us a sum of money on the execution of the agreement.

    This sum of money will attract a LTCG at the time the 2 properties given to the buider are registered. This would take about 2 years.

    We wish to invest the sum of money recieved by us in a residential house to offset this capital gain liability and would like to do so today i.e. about 2 years before the registration of the sold part is done.

    The law states that we can do so 1 year prior to the sale of the property.

    How can we invest in the property today and get the set off for the capital gains liability.

    Thanks

  62. VIRENDER says:

    I HAVE SOLD A AGRICULTURE LAND(MY PARENTAL PROPERTY) TO A PRIVATE BUILDER

    1. WHETHER I HAVE TO PAY INCOEM TAX ON LONG TERM CAPITAL GAIN ON SAID PROPERTY

    2. HOW CAN I SAVE MY TAX

    THANKS

    VIRENDER

  63. Sushant says:

    Hello,

    I have my residential property purchased in mar2009. Agreement value is rs. 1300000.

    Now i want to resale it. As per government valuation its value is rs 1900000 appr.
    As i am reselling it within 3 years of its purchase do i need to pay capital gain tax.
    And also advise how much tax i need to pay. Is there any exemption for senior citizen.

    Awaiting Reply.

    Regards,
    Sushant

  64. Raju says:

    I STT and Service tax allow to adjust with short term gain on shares

  65. SUBBA RAO says:

    I have a Commercial Property purchased in the year July 2004, and am planning to sell the property this F Y, kindly help me in knowing the tax implication on 2 situations :

    1 ) If i sold my property this year and i have some capital gain, what is the tax implication if i have not purchased any other property with the same amount.

    2) If i have one more property other than the sold property , can i purchase one more property and get the exemption.

    Kindly reply on priority.

  66. sunil makhija says:

    Dear Sir,

    We are 3 partners in a partnership firm. we purchased and sold the land within 3 years in the name of partnership firm. The firm does not have PAN no. etc. Can we transfer the amount of sale to the partner’s individual account in their ratio. And can each partner individually pay tax on his share of capital gain.

    Kindly guide me.

    thanks and regards

  67. kalyani says:

    if i take shorfall adjustment aganist sec.111A then what is tax rate for remaining amount under sec 111A?

  68. SANTHOSH says:

    OUR BUSINESS PROPOSE TO SELL LORRY HAVING WDV OF RS. 4.50 LAKH ON 1/4/2010.THE NET SALE CONSIDERATION WOULD BE RS.4.00 LAKH.
    WHAT WOULD BE THE AMOUNT OF CAPITAL GAIN / LOSS?

  69. Charles Amos says:

    Dear amit,
    I encashed shares of an unlisted company after holding the shares for 2.5 years. Now I want to know what is the best way to avoid tax on the long term capital gains of about 10L .
    My understanding is that I can get an exemption even if I bought a house of that value 1 year ago. My clarification is is this 1 year taken as exactly 12 months back or it is seen as being in the previous assessment year? I realised the sale now in Feb-11 and this residential property was purchased in Nov-09. Will I be able to avail the benefit?
    If yes, will this benefit be available against the total value of house purchase (55L)or only the portion I paid (10L), excluding the loan value?
    thanks for your time, Charles

  70. Krishna says:

    Sir,
    I have a business with a capital of 270 lakhs with a loan of 165 lakhs, private loans and creditors are 254 lakhs and the net block is 216 lakhs and the accumulated losses are around 300 lakhs, now i want sell the unit, the buyer is interested to buy only assets in that case Please advice, whether any capital gain tax is payable due to this sale transaction, if yes how much ? the sale price is 540 lakhs approximately.Whether is short term or long term. I

  71. Nagraj says:

    Sir, how do we calculate long term capital for following:
    1. Sale of Industrial land and building 10 years old which also has an OTS libility.
    2. Does the OTS amount get added to the cost of land and building?
    3. And what are the options to avail capital gain tax exemption on such property sale.
    Kindly enlighten and oblige.

  72. kishore says:

    Dear Sir
    THE PROPERTY SOLD AND GETTING REGISTERED/TRANSFERED IN FEB-MARCH 11
    WHEN THE CAPITAL GAIN TAX IS PAYABLE ?WHETHER IN FY 10-11
    OR FY 11-12.
    KLY REPLY BY EMAIL
    REGARDS
    KISHORE

  73. Rajan says:

    We are a family of four brothers and had an ancestral property. We got into a development agreement with a builder and later a sale deed. According to the agreement we would receive 15 lakhs each and 3 flats each on the property (which we have not received yet since the last two years). For tax calculation purpose, we got the property assessed as it was pre-1981 by a valuer. The value of the land worked out to two crores. My question is about myself. On what amount would the tax be calculated on 15 lakhs I have received or on the 2 crores which is the value of the land as per 1981 assessment? If on 15 lakhs then how much is the tax and under what section? If the tax is calculated on 2 crores then under what section?

  74. vikas says:

    X and Y both brothers acquired a property in 1998 with aquisition price 13500 vide conveyance deed , X and Y both gifted the property to X”s wife in feb 2009 with aquisition price 1720000.vide sale deed.if X”s wife sell the property in 2011 , will it cum under long term or short term capital gain…..if it’s under short term which price of aquisition will be considered to calculate the tax.

  75. Santosh says:

    I have a query in this regard in a specific case-

    1. A commercial office purchased in March 2007 for Rs.6,80,000/- for investment purpose but not used for any personal business or profession, therefore nay depreciation is not yet claimed on this property.

    2. The same office is sold in December 2010 for Rs.15,00,000/-

    3. The entire consideration received is reinvested on puchase of a new commercial office in the same month i.e. December 2010 for Rs.16,00,000/-

    Please advice, whether any capital gain tax is payable due to this sale transaction, if yes how much ?

  76. Rajesh says:

    is sale of long term commercial property allowed for without indexation then how much tax rate is applied?

  77. Rajesh says:

    is sale of long term commercial property allowed for without indexation then how much tax rate is applied

  78. nitesh says:

    I have Quried that i have sold 2 properties(Owned ) and purchase 1 new properties,out of two properties one of the properties is inharited by matronal site can i Eligable for deduction under section 54 of income tax, Act,1961 for both properties.

  79. Nisha says:

    I have bought equity shares worth Rs. 70,000 in April 2007. Current value of this is Rs. 8.7 lac.
    1) If I sell these today what will be the Income Tax implecations?
    2) Also, how to save this income tax?
    Pl help.

  80. guru says:

    My wife has yearly will have income of less than Rs 1,90,000/- which includes short term capital gains of Rs. 15,000/-. will she pay nil tax or 15% of Rs. 15,000/-

  81. Venkat says:

    Sir,

    I own a residential house from 1984 that is rented out all along. If I sell this house and make a net Long Term Capital Gain, am I entitled to claim exemption by investing in a specified Bond or another investing in another residential property?

    Kindly note thatI also own another residential house where I dwell?

    Grateful for your kind comments on this matter.

  82. murthy S.S says:

    hello,
    i got one query, iam retd govt.employee.

    iam having an house plot(ancestral) i want to sell it off.

    and in order to avoid CAPTIAL GAINS want to purchase an AGRICULTURE land.

    i want to know whether this will be ok.(i want to invest complete amount in AGRICULTURE land purchase. is there any time limit.?

    i want to GIFT some amount to MY SONS AND DAUGHTERS IS THERE ANY TAX IMPLICATIONS?

    what are the other options available for me to avoid the payment of CAPTIAL GAINS tax.

    AS OF NOW IAM NOT PAYING ANY INCOME TAX. AS MY INCOME IS LESS THAN TAX SLABS.

    thanks in advance

    murthy

  83. Gini says:

    It was very helpful as presentation was to the point and was excellent.
    All the points were covered.
    case examples given was found very useful
    thanks.

  84. AMIT BAJAJ ADVOCATE says:

    if the mutual funds are equity oriented funds, the long term gain from which if any, is exempt u/s 10(38), then the loss arising therefrom in your case will not be allowed to be set off from the LTCG arising from commericial house property, otherwise it can be set off and for the remaining LTCG you will have to invest propotionate amount of the sale proceed in a residential house to claim exemption u/s 54F.

  85. nishit agrawal says:

    i have sold my commercial house property @8.5 lac with ltcg of 6 lac…… nw i also have sold my mutual fund making a long term loss of .80 lac …nw wat is the amount i need to invest in new house to avail full exemption under 54f ??

  86. AMIT BAJAJ ADVOCATE says:

    If the block of asset continue to exist then no stcg will arise from sale of one asset in the same block.

  87. AMIT BAJAJ ADVOCATE says:

    Q: If long term equity shares are sold in an off market transaction whether the resultant loss can be allowed to be set-off against taxable long term gains.

    If LTCG arising from equity shares which is not exempt u/s 10(38)is taxable then LTCL arising from such case will also be allowed to be set off.

  88. Narayan says:

    Assets comprising machinery, office equipments, car come under block of assets – Machinery & Plant. If say machinery wdv on 1.4.2009 is Rs 1,00,000 is sold for Rs 1,25,000 while WDV of office equipments and car as of 1.4.2009 is Rs 5,00,000 and depr for th year is Rs 75,000. Will the excess of Rs 25,000 received on sale of Machinery be taxed under short term capital gains, although other capital assets in the block contines ?

  89. Pushpak says:

    If long term equity shares are sold in an off market transaction whether the resultant loss can be allowed to be set-off against taxable long term gains.

  90. AMIT BAJAJ ADVOCATE says:

    LTCG arising from a commercial property is also eligible for exemption u/s 54F

  91. AMIT BAJAJ ADVOCATE says:

    Yes, 15% if stcg arises from shares and securities and at normal slab rate if arises from other capital assets.

  92. 15% . special rate will be applicable

  93. KHUSHBOO says:

    If income is above 190000 is due to STCG THEN WILL IT BE CHARGEABLE @ 10% OR 15% for A.Y 10-11

  94. ashwin gattani says:

    is commercial property eligible for 54F exemption

  95. ajay says:

    I HAVE SOLD A LAND OTHER THAN USED FOR AGRICULTURE IN JANUARY,2010. THE LAND WAS PURCHASED IN 2003-04 AND CAPITAL GAIN COMES OUT TO BE APPROX 300000/- AFTER CALCULATING THE INDEX VALUE. MY QUERY IS
    1. WHAT IS THE TIME LIMIT FOR THE INVESTMENT IN THE BOND.PLEASE NAME THE BOND IN WHICH I CAN DEPOSIT THE SAME AND WHAT AMOUNT I HAVE TO DEPOSIT (i.e. TOTAL SALE AMOUNT OR TOTAL GAIN)
    2. IF I WANT TO INVEST IN THE RESIDENTIAL PROPERTY THEN WHAT IS THE PROVISION. IF I CONSTRUCT THE HOUSE OR I PURCHASE A FLAT. PLEASE REPLY SOON SO THAT I CAN DO AS PER YOUR ADVICE IN TIME.

    THANKS
    AJAY

  96. CA Sandeep Kanoi says:

    Yes. Even In Assessment year 2009-2010 LTCG from STT paid equity share is exempt.

  97. Vijay says:

    Sir, I can’t find Section 10(38) in the Income Tax Act 2009. As such does the notion that LTCG from STT paid euity shares are exempt from taxation; still hold good for A.Y. 2010-11

  98. Aashish Saraswat says:

    Really an informative and concise article . Shaabhaas

  99. Satih says:

    very well presented

  100. Rugram says:

    Very useful article. To enhance its usefulness, it would have been better to include a section on setting off of ST/LT capital gains against ST/LT capital losses.

  101. R.LGARG says:

    very educatieve article

  102. VINODRAI SHAH says:

    Very good,both informative and useful article.Thanks a lot for providing such articles.

  103. CA Yagnesh Desai says:

    Very Good article. Informative & Comprehensive.

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