1. This article covers reporting of Capital Gain on the sale of Immovable Property in ITR 2. An attempt has been made to simplify the return filing with the help of Illustrations and Frequently Asked Questions.
2. ITR 2 can be filed by Individuals and Hindu Undivided Families (HUFs) having income from any other source except Business and Profession. Taxpayers having income exceeding Rs 50 lakhs or having income from Capital Gains, multiple house properties, or foreign assets are required to file ITR 2.
3. Illustration: Mr. Naresh sold his residential flat on 25.03.2024 for Rs 60,00,000/- The said flat was purchased on 02.02.2019 for Rs. 7,50,000 He has incurred an expenditure of Rs.1, 67,857 /- towards the sale of property. Mr. Naresh invested Rs. 36,00,000 in the purchase of a new residential property on 25.04.2024.
3.1 He has also sold shares for Rs 4, 00,000 and invested the sale proceeds of Rs 4, 00,000 in the new residential property purchased on 25.04.2024.
Q1 How to calculate Capital Gain Tax & report the details in ITR 2?
Ans: The step-by-step procedure to report the above transactions in ITR 2 is as follows:
Step 1 The Path is Dashboard > Filing Return for A.Y. 2024-25 > ITR 2 > Schedules>Schedule Capital Gain > Capital Assets sold > Land Building details.
Step 2 Select the date of purchase/acquisition and sale/transfer to calculate short-term or Long-Term Capital Gain / Loss from the drop-down menu: –
| Sl. | Particulars | Date |
| (a) | Date of Purchase / Acquisition | 02.02.2019 |
| (b) | Date of Sale/transfer | 25.03.2024 |
| (c) | Property held for 61 months and 24 days (automatically calculated by the portal) | |
| Since the period of holding is more than 24 months, it is taxable under the Head “Long Term Capital Gain” | ||
Step 3 Calculate the Value of Consideration.
| Sl. | Particulars | Amount (Rs.) |
| a(i) | The full value of the consideration received | 60,00,000 |
| a(ii) | Value of property as per Stamp Valuation Authority | 65,00,000 |
| a(iii) | Full Value of consideration adopted as per 50C the purpose of Capital Gain. | 60,00,000 |
| Note: In case (aii) does not exceed 1.10 times (ai), take this figure as (ai), or else take (aii) | ||
Q2. What is section 50C of the Income Tax Act and what is its relevance for ascertaining sale consideration?
Ans. As per Section 50C of the Income Tax Act, the value of sale consideration should not be less than the stamp duty value as assessed by the Stamp Valuation Authority. However, a marginal relief of 10% variation is allowed by the income tax department.
In the above Illustration, the Stamp duty valuation of Rs. 65,00,000 lakh does not exceed 1.10 times of sale value of Rs. 60,00,000. Hence value of sale consideration is to be taken for calculation of Capital Gain.
Step 4 Calculate Cost of acquisition (deduction u/s 48)
| Sl. | Particulars | Amount (Rs.) |
| (ai) | Cost of acquisition | 7,50,000 |
| (aii) | Cost of acquisition with indexation | 9,32,143 |
| (aiii) | Expenditure incurred for transfer of property | 1,67,857 |
| (aiv) | Total cost of acquisition (aii+aiii) | 11,00,000 |
| Note: The Cost Inflation Index (CII) for the financial year 2023-24 is 348.For 2018-19, CII was 280 | ||
Q3. What is section 48 of the Income Tax Act?
Ans: As per section 48 of the Income Tax Act, the income chargeable as Capital Gain must be calculated after deducting the cost of acquisition, cost of improvement, and expenditure incurred exclusively in connection with the transfer of Assets.
Q4. What is indexation benefit and how cost of acquisition with indexation will be calculated?
Ans The taxpayer can take benefit of indexation by adjusting the cost of acquisition/improvement while computing Long Term Capital Gain
Indexation is a method of adjusting the purchase price of an asset, typically investments like stocks, bonds, or real estate, based on the prevailing inflation rate. This adjustment aims to account for the decrease in the asset’s purchasing power caused by inflation over time.
Indexation helps investors accurately determine capital gains, ensuring that taxes are levied only on the real gains that surpass inflation, resulting in a fairer taxation process.
The government’s official measure of inflation, often indicated by the Consumer Price Index (CPI), is used to calculate the adjustment.
The cost of acquisition with indexation can be calculated by using the following mathematical formula:
Indexation = Original cost of acquisition * CII of the given year / CII of the base year
In the Illustration above, it is calculated as 7,50,000*348/280 = 9,32,143/-
Step 5 Calculate Capital Gain:
| Sl. | Particulars | Amount (Rs.) |
| (ai) | Sale Consideration | 60,00,000 |
| (aii) | Indexed Cost of acquisition | 11,00,000 |
| (aiii) | Long-Term Capital Gain | 49,00,000 |
Step 6 Claim deduction (exemption) under section 54/54F
| Sl. | Particulars | Amount (Rs.) |
| (ai) | Long-Term Capital Gain | 49,00,000 |
| (aii) | Less: Exemption under section 54 | (36,00,000) |
| (aiii) | Less: Exemption under section 54F | (4,00,000) |
| (aiv) | Long Term Capital Gain (taxable) | 9,00,000 |
Q5. What are the provisions under sections 54 & 54F for claiming exemptions against Long Term Capital Gain?
Ans: The taxpayer can claim exemption against Long Term Capital Gain arising from the sale of residential houses and other assets respectively under sections 54 & 54F by investing in a residential house.
For claiming long-term capital gains exemption under Section 54 arising from the sale of a residential house, the capital gains computed by reducing the indexed cost of the house from the net sale consideration is required to be invested.
To claim a long-term capital gain exemption under Section 54F on the sale of plots of land or any other assets, the net sale consideration is required to be invested.
If full consideration is not invested, only proportionate indexed long-term capital gains can be claimed as an exemption.
Q6. Whether exemption under sections 54 & 54F can be claimed for investment in the same house?
Ans: Sections 54 and 54F are independent provisions and are not mutually exclusive. One can claim an exemption under both sections for investing in the same house. There is no specific bar in simultaneously claiming the exemption under both sections. The same has been decided by the Income Tax Appellate Tribunal in the decision of Venkata Ramana Umereddy Vs Dy. CIT (ITAT Hyderabad).
Q7. What details are required to be furnished in ITR 2 in case of sale/transfer of immovable property?
Ans: The details that need to be furnished are (a) Name of the Buyer (b)PAN/Aadhar of the Buyer (c)% of share (d) Amount (e)Address of property (f) Country / Region (g)Pin Code (h) State
Furnishing PAN / Aadhar is mandatory if tax is deducted under section 194IA or is quoted by the buyer in the documents. In case of more than one buyer, percentage share and amount are required to be indicated.
Step 7: Enter the deduction (exemption) details in Table D of Schedule Capital Gain
| TABLE D: Information About Deduction Claimed Against Capital Gains | ||
| (ai) | Deduction claimed under section 54 | 36,00,000 |
| (aii) | Deduction claimed under section 54F | 4,00,000 |
Q8. What details are required to be furnished for claiming a deduction against Capital Gains?
Ans. The details required for claiming deduction against Capital Gains are (a) the Date of Transfer of old asset (b) the Date of purchase/construction of new assets (c) the Cost of new residential amount (d) the Amount deposited in the Capital Gain Account scheme before the due date(e) Date of deposit (f) Account Number (g) IFSC Code (h) Amount of deduction claimed
Details of Capital Gain Scheme Accounts are required only if the capital gain is not invested in the purchase/construction of new property before the due date of filing the return.
NOTE: Deduction u/s. 54 claimed here (Table D) should match the total of deduction(s) claimed in the respective asset.
4. The details from the inputs will automatically flow into the following Tables & Schedules: –
(a) Table E (Set-off of Current Year Capital Losses with Current Year Capital Gains), Table F: (Information about accrual/receipt of capital gain)
(b) Schedule CYLA (Current year Loss Adjustments), Schedule CFL (Carry Forward losses) Schedule BFLA (Brought forward losses Adjustment) & Schedule SI (details of income taxable at special rates).
5. The details of particulars in these Tables & Schedules will be covered in the next article.
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Disclaimer: The article is for education purposes only.
The author may be approached at [email protected]
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The amount of Capital gain of Rs 10 Lakhs is required to be entered in Table D
Thank you madam for the clarification. Now, if I am registering the new flat jointly with my wife, what value of the new flat purchased should be entered in table D – is it the full value of the flat or only the value of my share?
If the total outflow from your account , enter the full amount otherwise enter your share of amount invested for purchase of new property.
Hi, I have sold a plot and received total sale proceeds of 50 lacs. Capital gains calculated on this is 10 lacs. I have reinvested the entire 50 lacs in a residential flat of cost 1 Cr within the specified time limit.
When filling ITR-2 under Table D of CG, what value should be entered as the amount of deduction claimed – should I enter 10 lacs or 50 lacs in this field?
The deduction claimed will be Capital Gain amount – Rs. 10 Lakhs
Thank you madam for the clarification. Now, if I am registering the new flat jointly with my wife, what value of the new flat purchased should be entered in table D – is it the full value of the flat or only the value of my share?
the claim of deduction u/ss 54 and 54F together exeeds the cost of new house, which will not be allowed.The decision you have quoted will be applicable when the deduction is less than the value of the house or it covers the value of new house. deduction can’t exeed the investment in new house. The harmonious interpretion of these sections can only be that the deduction will be allowed when the capital gain is used for investment in house property.Beyond Rs.3600000/- is not used in purchase of house propety and excess amount will not be allowed.
we all 6 bothers sold the our father property for the price of rs 3 crores. each one got rs 50 lacs. My question is should i show in my return ITR 2 only 50 lacs of sale proceeds or should i show 3 crore and then should i show i received rs 50 lacs
I am confused at the time of filing my ITR 2
Kindly advise me
You need to report Rs 50 Lakhs as sale consideration.
While filling table D for deduction under section 54F, am getting the error ‘Deduction u/s. 54 claimed here (Table D) should match the total of deduction(s) claimed in the respective asset’.
please guide me how to proceed
Ensure that total of all the deductions match with amount entered in Table D of Capital Gain Schedule .
1) While filling table D for deduction under section 54F, am getting the error ‘Deduction u/s. 54 claimed here (Table D) should match the total of deduction(s) claimed in the respective asset’.
You have advised to Ensure that total of all the deductions match with amount entered in Table D of Capital Gain Schedule .
I am not able to Find as to Which Total value of all the Deductions are to be taken here to match with amount to be entered in Table D of Capital Gains Schedule?
Which Value of Deductions ??
I have tried with all possible numbers available in my ITR, but no Luck !!
2) Also, I’m having some CFL (Carry Forward losses) of previous Years. Is it that all such previous Losses will be Set-off, when this year, I can set them off with amount from section 54F value (LTCG this year from Sale of Shares & purchase of Property)?
Please respond.
You need to enter the details in these Tables in a sequence.
The figures will be auto populate , but it need to be confirmed ( Click on Compute & Confirm)
First click on schedule CYLA , followed by BFLA and in the last CFL.
While entering the Sale Consideration and the Purchase value in the LongTerm Capital Gain module, there is a query asking for the amount which need to be availed as a deduction u/s 54F. Enter the amount before going to Table D.
Facing same issue did it resolve for you ?
Deduction u/s. 54F claimed here (Table D) should match with total of deduction(s) claimed in respective asset.
Before entering the details in Table D , click on Schedules CYLA, BFLA & CFL .
sir
I was purchased a house in 2011 with my savings and housing loan. The was purchased on jointly me and wife name. In dec 2023 I was sold this house and 1% TDS was deposited in both of ours PAN account. Now I want to know that long-term capital gain will arise only on me or both of us.
thanks
Dear Sandeep Sir
Thanks for your valuable feedback. The idea was to explain, how the deductions are required to be reported in ITR 2.
Deduction U/S 54F was from sale of share as you rightly said , the taxpayer will get exemption for his income from share.
Since , income from share is not covered in this article , it is not giving the correct picture.
I will certainly clarify it in the next article .
Regards
Dear Rajendra Sir
Capital Gain on share will be covered in the next article.
Dear Ganesh Sir
Thanks for your humble comments. It really motivates to do better.
Dear Madan Lal Sir
It will be Long Term Capital Gain as the property received by virtue of will and , in such case , the period will be from the date , it was held by the previous owner.
My father in law purchased the property in1968 and by virtue of will, the partition deed was prepared in August 2023. Now my grand son is going to sell the property. in April 2024. Whether it will be long term capital gain or short term capital gain?
Thank you for this illustrative article.
Capital gains on shares has not been considered in the above example
In the example given, Person has sold shares for Rs. 4,00,000. He must have earned capital gain on sale of shares. This capital gain of sale of shares shall get exempt u/s 54F if he has invested it in a residential house, subject to other conditions. But this Rs. 4,00,000 will not get reduced from capital gain of house sold by him. Secondly how much is total investment in new house. If it is Rs. 36,00,000 only as mentioned in example, that deduction u/s 54 shall get reduced by this amount as investment u/s 54 shall be Rs. 32,00,000 only. Kindly recheck all facts and calculations.