Article explains What incomes are charged to tax under the head Capital Gains, meaning of capital asset /long-term capital assets, What is long-term capital gain and short-term capital gain , Why capital gains are classified as short-term and long-term, How to compute long-term capital gain, benefit of indexation, Calculation of Capital Gain In respect of capital asset acquired before 1st April, 2001, What constitutes ‘transfer’, capital gain in case of transfer of asset by way of gift / will, etc., capital gains exempt under section 10, Rates capital gains are charged to tax, benefit in respect of re-investment of capital gain in any other capital asset, Investment in Bonds to claim Capital Gain Exemption etc.
As per Wikipedia A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the amount realized on the disposition exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price. Conversely, a capital loss arises if the proceeds from the sale of a capital asset are less than the purchase price. Capital gains may refer to “investment income” that arises in relation to real assets, such as property; financial assets, such as shares/stocks or bonds; and intangible assets.
Frequently Asked Questions on Taxation of Capital Gains in India
Q.1 What incomes are charged to tax under the head “Capital Gains”?
Ans. Any profit or gain arising from transfer of a capital asset during the year is charged to tax under the head “Capital Gains”.
Q.2 What is the meaning of capital asset?
Ans. Capital asset is defined to include:
a) Any kind of property held by an assessee, whether or not connected with business or profession of the assesse.
b) Any securities held by a FII which has invested in such securities in accordance with the regulations made under the SEBI Act, 1992.
However, the following items are excluded from the definition of “capital asset”:
Any stock-in-trade, consumable stores, or raw materials held by a person for the purpose of his business or profession.
E. g.,Motor car for a motor car dealer or gold for a jewellery merchant, are their stock-in-trade and, hence, they are not capital assets for them.
- Personal effects of a person, that is to say, movable property including wearing apparels (*) and furniture held for personal use, by a person or for use by any member of his family dependent on him.
(*) However, jewellery, archeological collections, drawings, paintings, sculptures, or any work of art are not treated as personal effects and, hence, are included in the definition of capital assets.
- Agricultural Land in India, not being a land situated:
* Within jurisdiction of municipality, notified area committee, town area committee, cantonment board and which has a population of not less than 10,000;
* Within range of following distance measured aerially from the local limits of any municipality or cantonment board:
* not being more than 2 KMs, if population of such area is more than 10,000 but not exceeding 1 lakh;
* not being more than 6 KMs , if population of such area is more than 1 lakh but not exceeding 10 lakhs; or
* not being more than 8 KMs , if population of such area is more than 10 lakhs.
Population is to be considered according to the figures of last preceding census of which relevant figures have been published before the first day of the year.
- 6½% Gold Bonds, 1977 or 7% Gold Bonds, 1980 or National Defence Gold Bonds, 1980 issued by the Central Government.
- Special Bearer Bonds, 1991, issued by the Central Government
- Gold Deposit Bonds issued under Gold Deposit Scheme, 1999.
- Deposit certificates issued under the Gold Monetisation Scheme, 2015.
Following points should be kept in mind :
- The property being capital asset may or may not be connected with the business or profession of the taxpayer. g.Bus used to carry passenger by a person engaged in the business of passenger transport will be his Capital asset.
- Any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 will always be treated as capital asset, hence, such securities cannot be treated as stock-in-trade.
Q.3 What is the meaning of the term ‘long-term capital asset’?
Ans. Any capital asset held by a person for a period of more than 36 months immediately preceding the date of its transfer will be treated as long-term capital asset.
However, in respect of certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India, units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 36 months.
In case of unlisted shares in a company, the period of holding to be considered is 24 months instead of 36 months.
With effect from Assessment Year 2018-19, the period of holding of immovable property (being land or building or both), shall be considered to be 24 months instead of 36 months.
Q.4 What is long-term capital gain and short-term capital gain?
Ans. Gain arising on transfer of long-term capital asset is termed as long-term capital gain and gain arising on transfer of short-term capital asset is termed as short-term capital gain. However, there are a few exceptions to this rule, like gain on depreciable asset is always taxed as short-term capital gain.
Q.5 Why capital gains are classified as short-term and long-term?
Ans. The taxability of capital gain depends on the nature of gain, i.e. whether short-term or long-term. Hence to determine the taxability, capital gains are classified into short-term capital gain and long-term capital gain. In other words, the tax rates for long-term capital gain and short-term capital gain are different. Similarly, computation provisions are different for long-term capital gains and short-term capital gains.
Q.6 How to compute long-term capital gain?
Ans. Long term capital gain arising on account of transfer of long-term capital asset will be computed as follows:
| 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, 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 |
Indexed cost of acquisition is computed with the help of following formula :
Cost of acquisition × Cost inflation index of the year of transfer of capital asset
Cost inflation index of the year of acquisition
Indexed cost of improvement is computed with the help of following formula :
Cost of improvement × Cost inflation index of the year of transfer of capital asset
Cost inflation index of the year of improvement
Q.7 How to compute short-term capital gain?
Ans. Short-term capital gain arising on account of transfer of short-term capital asset is computed as follows:
|
Particulars |
Rs. |
| Full value of consideration (i.e., Sales value of the asset) | XXXXX |
| Less: Expenditure incurred wholly and exclusively in connection with transfer of capital asset (E.g., brokerage, commission, etc.) | (XXXXX) |
| Net Sale Consideration | XXXXX |
| Less: Cost of acquisition (i.e., the purchase price of the capital asset) | (XXXXX) |
| Less: Cost of improvement (i.e., post purchase capital expenses incurred on addition/improvement to the capital asset) | (XXXXX) |
| Short-Term Capital Gain | XXXXX |
Q.8 Is the benefit of indexation available while computing capital gain arising on transfer of short-term capital asset?
Ans. Indexation is a process by which the cost of acquisition/improvement of a capital asset is adjusted against inflationary rise in the value of asset. The benefit of indexation is available only in case of long-term capital assets and is not available in case of short-term capital assets.
Q.9 In respect of capital asset acquired before 1st April, 2001 is there any special method to compute cost of acquisition?
Ans. Generally, cost of acquisition of a capital asset is the cost incurred in acquiring the capital asset. It includes the purchase consideration plus any expenditure incurred exclusively for acquiring the capital asset. However, in respect of capital asset acquired before 1st April, 2001, the cost of acquisition will be higher of the actual cost of acquisition of the asset or fair market value of the asset as on 1st April, 2001. This option is not available in the case of a depreciable asset.
Q.10 If any undisclosed income [in the form of investment in capital asset] is declared under Income Declaration Scheme, 2016, then what should be the cost of acquisition of such capital asset?
Ans. The fair market value of the asset as on 1st June, 2016 [which has been taken into account for the purpose of said declaration Scheme, 2016] shall be deemed as cost of acquisition of the asset. [This provision is applicable w.e.f. 1-4-2017]
Q.11 As per the Income-tax Law, gain arising on transfer of capital asset is charged to tax under the head “Capital gains”. What constitutes ‘transfer’ as per Income-tax Law?
Ans. Generally, transfer means sale, however, for the purpose of Income-tax Law “Transfer”, in relation to a capital asset, includes:
i. Sale, exchange or relinquishment of the asset;
ii. Extinguishment of any rights in relation to a capital asset;
iii. Compulsory acquisition of an asset;
iv. Conversion of capital asset into stock-in-trade;
v. Maturity or redemption of a zero coupon bond;
vi. Allowing possession of immovable properties to the buyer in part performance of the contract;
vii. Any transaction which has the effect of transferring an (or enabling the enjoyment of) immovable property; or
viii. Disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever.
Q.12 What are the provisions relating to computation of capital gain in case of transfer of asset by way of gift, will, etc.?
Ans. Capital gain arises if a person transfers a capital asset. section 47 excludes various transactions from the definition of ‘transfer’. Thus, transactions covered under section 47 are not deemed as ‘transfer’ and, hence, these transactions will not give rise to any capital gain. Transfer of capital asset by way of gift, will, etc., are few major transactions covered in section 47. Thus, if a person gifts his capital asset to any other person, then no capital gain will arise in the hands of the person making the gift (*).
If the person receiving the capital asset by way of gift, will, etc. subsequently transfers such asset, capital gain will arise in his hands. Special provisions are designed to compute capital gains in the hands of the person receiving the asset by way of gift, will, etc. In such a case, the cost of acquisition of the capital asset will be the cost of acquisition to the previous owner and the period of holding of the capital asset will be computed from the date of acquisition of the capital asset by the previous owner.
(*) As regards the taxability of gift in the hands of person receiving the gift, separate provisions are designed under section 56.
Q.13 I have sold a house which had been purchased by me 5 years ago. Am I required to pay any tax on the profit earned by me on account of such sale?
Ans. House sold by you is a long-term capital asset. Any gain arising on transfer of capital asset is charged to tax under the head “Capital Gains”. Income-tax Law has prescribed the method of computing capital gain arising on account of sale of capital assets. Thus, to check the taxability in your case, you have to compute capital gain by following the rules laid down in this regard, and if the result is gain, then the same will be liable to tax.
Q.14 Are any capital gains exempt under section 10?
Ans. Section 10 provides list of incomes which are exempt from tax amongst those the major exemptions relating to capital gain are as follows:
Section 10(33): Long-term or short-term capital gain arising on transfer of units of Unit Scheme, 1964 (US 64) referred to in Schedule I to the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) and where the transfer of such asset takes place on or after 1-4-2002.
Section 10(37) : An individual or Hindu Undivided Family (HUF) can claim exemption in respect of capital gain arising from the transfer of agricultural land situated in an urban area by way of compulsory acquisition under any law or a consideration for such transfer is determined or approved by the Central Government or the Reserve Bank of India. This exemption is available if the land was used by the taxpayer (or by his parents in the case of an individual) for agricultural purposes for a period of 2 years immediately preceding the date of its transfer. Such income has arisen from the compensation or consideration for such transfer received by an assessee on or after the 1st day of April, 2004.
Section 10(37A): An individual or Hindu Undivided Family (HUF) can claim exemption in respect of capital gain arising from the transfer of land or building or both under Land Pooling Scheme under the Andhra Pradesh Capital City Land Pooling Scheme (Formulation and Implementation) Rules, 2015 made under the provisions of the Andhra Pradesh Capital Region Development Authority Act, 2014 (Andhra Pradesh Act 11 of 2014) and the rules, regulations and Schemes made under the said Act. This exemption is available if an individual or HUF was owner of such land or building as on 02-06-2014.
Q.15 At what rates capital gains are charged to tax?
Ans. For provisions in this regard check tutorials on “Tax on Short-Term Capital Gains and Tax on Long-Term Capital Gains”.
Q.16 Is there any benefit available in respect of re-investment of capital gain in any other capital asset?
Ans. A taxpayer can claim exemption from certain capital gains by re-investing the amount of capital gain into specified asset. The following table highlights the assets in respect of which the benefit of re-investment is available:
| Section under which bene fit is available | Eligible Assessee | Gain eligible for claiming exemption | Asset in which the capital gain is to be re-invested to claim exemption |
| section 54 | Individual/HUF | Long-term capital gain arising on transfer of residential house property. | Gain to be re-invested in purchase or construction of one residential house property in India.
However, an assessee can make investment in two residential house property in India. The option of making investment in two residential house is available only if the amount of long-term capital gain doesn’t exceed Rs. 2 crore. Further, the benefit of making investment in two residential houses can be availed once in a lifetime. Further, if the cost of new asset exceeds Rs. 10 crore, the excess amount shall be ignored and Rs. 10 crore shall be taken into consideration. |
| section 54B | Individual/HUF | Long-term or short-term capital gain arising on transfer of agricultural land which was used by individual or his parents or HUF for agriculture purposes for at least 2 years immediately prior to transfer. | Gain to be re-invested in purchase of agricultural land (may be in rural arear or urban area). |
| section 54EC | Any person | Long term capital gain arising on transfer of land or building or both . | Gain to be re-invested in purchase of bonds specified under section 54EC. |
| Section 54EE | Any person | Long-term capital gain arising on transfer of any capital asset. | Gain to be re-invested in long-term specified assets to be notified by the Central Government to finance start-ups. |
| section 54F | Individual/HUF | Long-term capital gain arising on transfer of any capital asset other than residential house property, provided on the date of transfer the taxpayer does not more than one residential house property from the assessment year 2001-02 (except new house property) | Net sale consideration to be re-invested in purchase or construction of only one residential house property in India. Note: if the cost of new asset exceeds Rs. 10 crore, the excess amount shall be ignored and Rs. 10 crore shall be taken into consideration. |
| section 54D | Any person | Long-term or Short-term capital gain arising on transfer of land or building forming part of an industrial undertaking which is compulsorily acquired by Government and was used for industrial purpose for a period of 2 years prior to its acquisition. | Gain to be re-invested to acquire land or building for industrial purposes. |
| section 54G | Any person | Long term or Short term capital gain arising on transfer of land, building, plant or machinery in order to shift an industrial undertaking from urban area to rural area. | Gain to be re-invested to acquire land, building, plant or machinery in order to shift an industrial undertaking to a rural area. |
| section 54GA | Any person | Long term or short term capital gain arising on transfer of land, building, plant or machinery in order to shift an industrial undertaking from urban area to any Special Economic Zone. | Gain to be re-invested to acquire land, building, plant or machinery in order to shift an industrial undertaking to any Special Economic Zone. |
| section 54GB | Individual/HUF | Long-term capital gain arising on transfer of residential property (a house or a plot of land). The transfer should take place during 1st April, 2012 and 31st March 2017. However, in case of investment in “eligible start-up”, the residential property can be transferred upto 31st March 2022. | The net sale consideration should be utilised for subscription in equity shares of an “eligible company”. W.e.f. April 1, 2017, eligible start-up is also included in definition of “eligible company” . |
In order to claim the exemption on account of re-investment in various situations as discussed above, other conditions specified in the respective sections should also be satisfied and the re-investment should be made within the period specified in the respective sections.
Q.17 Are there any bonds in which I can invest my capital gains to claim tax relief?
Ans. As per section 54EC – An assessee can claim tax relief by investing the amount of long-term capital gain arising from:
a) any long term capital asset (upto A.Y 2018-19)
b) Long term capital asset being land or building or both (From A.Y 2019-20) in the specified bonds as follows:
a) Bond redeemable after 5 years from A.Y 2019-20 (3 years upto A.Y 2018-19) issued by National Highways Authority of India (NHAI) or
b) Bond redeemable after 5 years from A.Y 2019-20 (3 years upto A.Y 2018-19) issued by Rural Electrification Corporation Limited (REC) or
c) Bond redeemable after 5 years from A.Y 2019-20 (3 years upto A.Y 2018-19) issued on or after 15th June 2017 by Power Finance Corporation Limited or
d) Bond redeemable after 5 years from A.Y 2019-20 (3 years upto A.Y 2018-19) issued on or after 08th August 2017 by Indian Railway Finance Corporation Limited or
e) Bond redeemable after 5 years from A.Y 2019-20 (3 years for A.Y 2018-19) issued by any other authority but notified by Central Government [Applicable from A.Y 2018-2019]
within a period of 6 months from the date of transfer of capital asset and such bonds should not be redeemed before 5 years from A.Y 2019-20 (3 years upto A.Y 2018-19) from the date of their acquisition.
This benefit cannot be availed in respect of short-term capital gain.
Maximum amount of investment in specified bonds cannot exceeds Rs. 50,00,000. Thus, deduction under section 54EC cannot be claimed for more than Rs. 50,00,000.
Q.18 What is the meaning of stamp duty value and what is its relevance while computing capital gain in case of transfer of capital asset, being land or building or both?
Ans. “Stamp duty value means the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty. As per section 50C, while computing capital gain arising on transfer of land or building or both, if the actual sale consideration on transfer of such land and/or building is less than the stamp duty value, then the stamp duty value will be taken as full value of consideration, i.e., as deemed selling price and capital gain will be computed accordingly.” (not applicable from A.Y 2019-20)
From assessment year 2019-20 actual sales consideration will be treated as full value consideration if stamp duty value does not exceeds 105% of actual sales consideration. In case where stamp duty value exceeds 105%of actual sales consideration, then stamp duty value will be considered as full value of consideration for computing capital gain.
Q.19 Whether interest received on amount deposited in capital gain account under capital gain account scheme is taxable?
- Ans. Capital Gains Account Scheme is a scheme to facilitate the taxpayer.
- If taxpayer could not invest the capital gains
– to acquire new asset
– before due date of furnishing of return of income
– then the capital gains amount can be deposited
– before due date for furnishing of return of income
– in a special bank account
– maintained in any branch of a nationalized bank
- Interest earned on Capital Gains Account is chargeable to tax under the head “Income from Other Sources”
- Interest earned on Capital Gain Account is charged to tax in the year it accrues and is credited to the capital gain account of the assessee.
Q.20 Whether profit earned from sale of land or building or both chargeable to capital gain tax?
Ans. Profits and gains earned from sale of land or building or both are chargeable to tax under the head “Capital Gain”
In the case of sale of land or building or both, the value determined by stamp duty authorities will be considered as full value of consideration if the following conditions are satisfied –
a) The asset transferred is land or building or both.
b) Sale Consideration is less than the value as determined by the stamp duty authority for the payment of stamp duty.
c) Stamp Duty value exceeds 105% of the consideration received or receivable on account of transfer. [Applicable from A.Y 2019-20].
- For the purpose of valuation, stamp duty valuation shall be considered on the date of registration of the property.
Exception – Where the date of agreement fixing the consideration and date of registration are not same, then the stamp duty value will be considered on the date of agreement for such transfer.
The above exception will be applicable if –
a) Full consideration or part there-of is received by an account payee cheque/draft or by use of electronic clearing system through a bank account. Or through such other electronic mode as may be prescribed.
b) Such amount is received before the date of agreement.
c) It is applicable from the A.Y 2017-2018.
Q.21 Which Form is to be filed for withdrawal from Capital Gain Account?
Ans. As per Rule 9 of Capital Gain Accounts Scheme, 1988, the procedure of withdrawal from Capital Gain Account Scheme is as follows:
Withdrawal from Account-A
Amount can be withdrawn from Account-A at any time after making initial subscription by depositing Form C along with the pass book in the deposit office.
For any withdrawal from Account-A, other than initial withdrawal, a depositor needs to apply in Form D in duplicate. The details regarding the manner and extent of utilization of the amount of immediately preceeding withdrawal are as follows:-
Withdrawal from Account -B
A depositor intending to withdraw the amount from Account-B, shall first transfer the amount in his Account-B to Account-A and withdraw the amount in the same manner as is specified for Account-A. Manner of transfer and conversion of deposit account are prescribed under the Rule 7 of Capital Gain Accounts Scheme,1988.
Depositor having the deposit account B may apply in Form-B along with deposit receipts and details of deposit account A for transfer of the amount standing to credit in deposit account B. In case depositor has not opened deposit account A, depositor has also to request for opening deposit account A along with Form B.
Q.22 I want to close my capital gain account. The capital gain amount is already disbursed and only interest is lying in account. The branch manager asked for Form G with AO’s endorsement on it. How to get it? Please advise procedure?
Ans. 1. As per Rule 13 of Capital Gain Account Scheme 1988, in case of closure of capital gain account, a depositor (other than an eligible company as referred to in section 54GB applicable w.e.f 25-10-2012) is required to file an application in Form-G along with the passbook of account-A or deposit receipt of account-B, as the case may be, to the deposit office with the prior approval of the Assessing Officer who has jurisdiction over the depositor.
If a depositor is an eligible company as referred to in section 54GB, then for closure of capital gain account, it shall be required to make a joint application in Form G along with the passbook of account-A or deposit receipt of account-B, as the case may be, to the deposit office signed by the eligible assessee as referred to in section 54GB with the prior approval of the Assessing Officer having jurisdiction over the eligible assessee as referred to in section 54GB.
Deposit office shall make the payment of the amount in the account of depositor including the amount of interest accrued by crediting such amount to any bank account of the depositor.
2. In case of deceased depositor where nomination is made, a nominee may file an application for the closure of account in Form-H along with the passbook of account-A or deposit receipt of account-B, as the case may be, to the deposit office with the prior approval of jurisdictional Assessing Officer of the deceased depositor. Deposit office shall make the payment of the amount in the account of the deceased depositor, including the amount of interest accrued by crediting such amount to any bank account of the nominee.
3. In case of deceased depositor where nomination is not made, a legal heir may file an application for the closure of account in Form-H along with the passbook of account-A or deposit receipt of account-B, as the case may be, to the deposit office with the prior approval of jurisdictional Assessing Officer of the deceased depositor.
If there are more than one legal heir of the deceased depositor, the legal heir making the claim individually can do so by providing the letter of authorization from other legal heirs in his favour.
The Assessing Officer before granting the approval for the closure of account shall obtain from the legal heir a succession certificate issued under Part V of the Indian Succession Act, 1925, or a probate of the will of the deceased depositor, or letter of administration to the estate of the deceased, in case there is no will in order to verify the claim of such legal heir to the account of the deceased depositor.
Deposit office shall make the payment of the amount in the account of the deceased depositor, including the amount of interest accrued by crediting such amount to any bank account of the nominee.
[As amended by Finance Act, 2023]
I have sold a part of my building in 2117 and this building was const. from 1980 to 2005. How to evaluate the basic cost of the building for capital gain tax payment
mother sale her property to his son no cash or cheque transaction during the registry but in registry paper so paid 200000=00 what can i do for this mater.Son is fully dependent on mother he is a student aged about 26 year
We sale our plot located in pune for 10 lakhs but govt value is 50lakhs… we really get only 10 lakhs… there is some problem related to plot… we even didnt know were is actual plot. Its similar to khosla ka ghosla movie. One prop. Consultant suggest us to sale that at 10lakhs. plz tell about capital gain tax provision… and suggest solution to come out of this… this transaction done in fy 2012-13.
We actually get only 10lakhs amount…
Question : Whether the house can be treated as completed for income tax purpose under section 54 for which application for building completion has been made within the period of 3 Year but has not been received the certificate.?????
Hi,
Our ancestor property was was acquired by government for some of the development project and paid us the amount of 25,000 per acre of land in 1998. We filed a case in 1998 and currently(2017) court asked the government to pay us 400000 per Acre of land plus interest rate from 1998 to 2017. Based on the court order government is paid the amount to court and in-turn to us without deducting any tax or TDS. Could you please suggest me how we need to calculate the income tax or Capital gain tax and also how to save the income tax ?
Thanks & Regards,
Louis
I purchased flat in 2012 by bank loan of rs 30.00 lacs .total cost rs 53 lacs. and paid interest of rs. 2.45,2.86,93000 in 12-13,13-14 and 14-15 respectively. I availed tax relief u/s 24 b by deducting interest from income i.e rs. 1.5 lacs in 12-13 ,1.50 in 13-14 and 93000 in 14-15.
I sold flat in 14-15 in Rs.65.00 lacs. while calculating capital gain, whether I should add total interest of 6.24 lacs in flat cost. or
only 6.24-3.93=2.31 lacs (I have already availed rebate for interest of rs. 3.93 lacs). whether interest benefit can be availed in both section u/s 24 b and sec 54
Hi,
I have sold inherited residential house on 19th July 2014 and deposited the full consideration amount in SBI – Capital Gain Saving Account. SInce I couldn’t purchase the property, will any Tax Liability be due..Would interest be paid on tax amount..
Dear Team,
my father had a residential plot in Haryana, which we got in housing scheme of HUDA( Haryana Urban Development Authority) worth rupees 3 lac around 12 years ago. now we have sold out the plot in 28 lacs. As per law we have to invest the money in residential property. i just want to know can we buy new property on General power of attorney, or it should have registry? As most of the properties in unauthorized colonies of delhi (those are in the list of, delhi govt’s tentative colonies) are available on GPA only.
In the year 1992, we acquired some land (around 5 katha) by gift deed from government of West Bengal for rehabilitation purpose.
After that, we built our home on that land. (Don`t have a clue about construction cost, done by my dad and he is no more) Now, we are planning to sale that property to someone else. (Year 2017) I`m pretty much sure that property can be sold after 10 years of acquisition, but not sure about the tax amount to be paid!
Is there any capital gain tax involved here? How to calculate that? Whom to take help from regarding this scenario?
Thanks in advance for your help.
The provisions of ITax on Capital Gain are as under:
1.Purchase of another Residential Property within 1 year before or 2 years after the due date of transfer of the Property sold and/or
2.Construction of Residential house Property within a period of 3 years from the date of transfer/sale of property
My query is can I avail CG exemption in the following circumstances:
a. I have constructed a Flat and got completed during the AY 2017-18, by obtaining bank loan and other savings.
b. During the current year 2017-18 (AY 2018-19), I wish to sell my old flat acquired 12 years ago,
c. Can I avail the benefit since the construction of my house got completed ONE YEAR BEFORE the date of sale.
d. Whether the first clause is applicable only for purchase of residential property and not for construction of a residential property.
e. The doubt arises because, from the wordings given in the second clause, it appears that construction is allowed only, if it is commenced after the sale.
Your learned views pl.
Reply no 8
Suppose if I now buy a plot(with cost 40 lacs after taking a loan from bank) and register it on guidance value( 20 lacs). After 1 year if I build a house on that plot (cost is around 20 lacs). After 10 years, after completing the loan, if I sell that house (with 1 crore) how the long term capital gains will be calculated ? I know that capital gains are calculated on total profit – total cost. In this case the capital gain should be calculated on 40 lacs profit. But how will I prove that time that the construction of the house took 20 lacs. At that point of time, I could say that construction of my house took 40 lacs and so capital gains will be calculated on (1,00,00,000 – (40,00,000 + 40,00,000)) or 20 lacs.
How actually the capital gain calculation happens in this scenario ?
Will I have to furnish some document regarding the building construction cost ?
I have an issue. My client has paid subscription fee in 1996-97 and such money was converted into unlisted shares in 2007-08. In 2016,he sold such shares. Which year cab be considered for indexed cost of acquisition 1996-97 or 2007-08? Kindly help me with supportive evidence. I’d be glad to receive help. Thank you in anticipation.
Hi Sir,
I have a query regarding capital gains on gift of immovable property.
Scenario:
My maternal uncle (chachaji) wants to gift me a flat which is currently under construction. He has not received possession of the flat yet but is expected to get it in a couple of months. He will gift it to me post getting possession. Flat was booked by him around 4 years back. I plan to sell of the flat within a year as it is in Noida while I have now shifted to Pune where I would like to purchase a flat.
Query:
1. Is long term capital gain or any other sort of tax applicable on this gift.
2. When I get possession of this flat from my uncle (post re-registration) then if I sell it within a year then will it come under Short Term Capital Gain or Long Term Capital Gain.
3. If my uncle sells off the flat and gifts me the proceeds then is the proceeds tax exempted ?
4. What is a better option of the following:
a. gift flat to me and then I can sell it off within a year
b. sell the flat and gift the proceedings to me in online transfer
c. gift the flat/proceedings to my father (chachaji’s elder brother) and my father can then transfer the amount to me as gift.
Please advise.
Sir,
The inherited land from my grand father has given by me to a real estate firm to build duplex houses and my share is one duplex house whose cost is. rs 56 lakhs and will receive rs 14 lakhs as consideration money.
For clarity the inherited land offerd for development during April – 2014 to build duplex houses and the possession will be within March – 2017.
My queries are whether any capital gain tax is liable, and if it is , then how much.
Is there any ways to reduce the tax burden.
Please answer, Thanks
I want to sell the residential apartment which is on my dad’s name and would like to buy new residential apartment. The old residential is long term. In order to exempt tax under sec 54 capital gain, can i purchase new house under both the names for my dad and me?
Is it necessary to purchase 54EC bonds in one lot of Rs.50 lakhs or purchased in 5 lots of 10 lakhs each on applications with different joint holders within 6 calendar months to claim exemtion for capital gains?
My doubt is regarding 54 &54ec .I sold land for rs.1cr andlongterm capital gain is rs.25lakhs.
should I invest rs.25lakhs or rs.1cr in nha bond whichis limited to rs50lakhs.
investment in new house as per 54 need to bers.1.cr
pl reply me urgently.
Hello my name is vishwajeet . I have purchased land from father for rs 800000
and stamp duty is 24 00000 then for calculating capital gain which value is considered rs 800000 or rs 2400000 please give me solution…
Hello my name is John Morris from Switzerland but live in United Kingdom,am into property dealer business and also am into petrol pump business and and i want to invest in your country and i hop you can help me to establish my business in your country,and i want to build a gas station,hospital, hotel, school,shopping mall, and i need an empty land or 6 to acre of land to buy if you have any one to sell kindly contact me through my email: johnmorris939@gmail.com
I have gone for a Sale Agreement for property A in April 2016 for an advance of Rs 5L towards a property worth 40L. The Sale Deed & Registration will be executed for Property A in November 2016. In the mean time, i have already received 90% of the payment against Property A and have finalised a new Property B for Rs 50L, the sale deed of the same will be executed in July 2016. Now although there is no Capital gain involved, the sale deed of Property B is happening before the sale deed of Property A. Question: Will the executed Sale Agreement of Property A, which was made in April 2016 mentioning the cost of property to be Rs 40L be legally admitted to calculate my investment in Real Estate in order to negate Long Term Capital Gain?
If I have booked a flat and got an allotment letter in 2012, registered property in 2014 and possession letter was given in 2016.
If I sale the property this year will it attract STCG or LTCG tax. Please advise the relevant rule which applies in my case.
I sold MIDC (Maharashtra Industrial Development corpration) plot which is 20 km outside municipal corporation boundary. Am I liable for capital gain?
My wife had 2 adjoining plots and sold the same recently a plot each to a husband and his wife.
Is she eligible for Capital gain tax benefit if the whole amount which is less than 50lacs is deposited in REC/NHAI bonds, not even considering the indexation benefit?
Confirm she need not pay any capital gain tax.
She is otherwise a housewife and has some interest income much lower than the min limit attracting income tax.
She has neverneeded to file income tax return except last year to claim Refund of TDS deducted due to delay in filing 15H.
sg mani
Hi,
I just sold my apartment in Dec2015. Couple of quick questions:
1. For capital gain calculation should the actual sale value be taken or amount i received after buyer deducted 1% TDS ? I got 94L, selling cost is 94.94L.
2. Purchase details:
Date of allotment was 21-Jun-2007, and possession date: 29-Jul-2010.
Total paid to builder = 4673400/- by Jul 2010, registration-128800/- on 29 Jul 2010.
Woodwork & electric fittings: 6L in Dec 2010.
Question: For indexed property cost index of 2007 and indexed modification cost index of 2010 to be used. Kindly confirm?
3. If the sale cost is coming lesser than total indexed cost, then is it a loss on property ?
a. if yes then can i claim refund on TDS ? How to calculate relation of loss and refund of TDS amount.
b. If even after TDS refund loss is more, is there a way to use leftover loss in gaining tax or other benefits in any case ?
thanks so much,
Jaswant
Sir, please advice
Sir, all my transactions both purchase and sell done jointly..myself and wife
hello sir,
I have purchased one flat (F1) on NOV 2011 for 20 Lac and sold it in AUG 2015 for 35 lac, also I have purchased one flat (F2) in nov 2012 for 14 lac and planning to sell it for 20 lac within 6 months.. I have purchased flat (F3) in Nov 2015 for 63 lac out of it 18 lac paid direct by cheque and 45 lac paid through bank loan. can I save capital gain tax for sale of my both flats F1 &F2..capital gain from sale of F2 can be used for home loan pre payment ??
hello sir,
please tell me the provision regarding studded jewellery capital gain which was gifted by my father to me.. and
i have no bill of such jewellery which is nearly 1 kg which made by gold,diamond and many precious stones also
Hello Sir,
We have property which was on the name of my father. My father has given the property to us by will (Vasiyatnama) in 2007. Father expired in 2008.
Till the date we haven’t transferred the bungalow on our name.
Now if we want to sell our inherited bungalow property and we are interested to sell against cheque payment only. In this situation, we need to know that, in context of Long Term Capital Gain that if we transfer our bungalow on the name of all heir / successor and then we sell it, can we get benefit of new residential proper (provided single property is there) + Bond (50 Lacs) + Indexation for
every heir ?
If such benefit are available for every individual, are they available if
(i) we transfer the name of all heirs (Jointly for this bungalow & then sell it ? OR
(ii) we make parts of bungalow and then transfer the name of each part on the name of each heir individually & then sell it ?
Total 3 successor are their i.e.
1) Mother
2) Two Brothers
Please guide us.
Thanks & Best Regards,
Sunil Shah
What if I sold a residential land and invest the whole amount to purchase a residential house?
I sold land and full amount invested in constructed first floor on residential house. Can I claim Exemption.
i have sold my residential cum commercial property, in march 2022 and got long term capital gain,, simulteniously my new resident house construction is under progress,, and i utilised this whole sold amount from my regular saving account ( without opening capital gain account) for this new construction from same day ie,from march2022 to till completion likely in oct 2022,,
Let me know will it be penalised?? For utilising capital gain amount directly from regular saving account/instead capital gain account,,
Please guide,
If father sold urban agriculture land and sale consideration transferred to son account, out of that amount son purchased another urban agriculture land within one year can father take benefit of exemption in such case?
MR ” A” NON RELATIVE GIFTED HIS LAND TO HIS FRIEND “B” ( THE LAND VALUE IS 50,00,000 ), FY 2013-14
B IS PAID TAX ON GIFT UNDER INCOME FROM OTHER SOURCE FY 13-14
AND B SOLD THAT PARTICULAR LAND FOR RS 70,00,000 IN YEAR 2015-16,
IN CALCULATING CAPITAL GAIN FOR MR B IN FY 15-16,
CALCULATE THE CAPITAL GAIN
Let us say, I sold some shares (stock-1) and holding period is less than one year. I have used the complete sale proceeds to buy the shares (stocks-2) again. Is the gain due to selling the stock-1 taxable?
Sir,
I will be grateful if you could guide me on following, because I am not getting any clear answer from anyone.
Our partnership firm has sold an office space (after claiming depreciation, the book value is Rs.10 lacs). We got a sale value of Rs.50 Lacs which we entirely invested in buying another office premises at Rs.58 lacs. Since we acquired another commercial property are we liable to pay capital gain tax ?
Kindly reply. Thanks and regards.
I have sold the flat in Mumbai in which my mother is joint owner. I am the first holder & my mother is second holder. I am going to purchased the new flat within the one year span to avoid the capital gain tax. But I have to purchase the flat on my name only. In this case, my mother has to pay capital gain tax or it is exempted. If she is applicable for capital gain tax then how we can avoid the same.
Thanks and Regards,
Rajaram Sawant
I have filled nil returns for FY 13-14. I have received a scrutiny notice in this letter. As per my lawyer come to know that I have a short term capital gain by selling a land for that year. My question is that short term gain will be added to my income or tax will be charged directly on short term gain?
I and my wife own a residential house in Trivandrum where we are staying for the past over six years. It was gifted to us by our children about four years back. We have some landed property in Kochi in our name which was acquired by us in 2003 for an amount less than 30 lakhs which we want to sell now for buying a residential house in Chennai. The present estimated cost of the said land may be anything between 2 and 3 crores. Since we already own a residential house, will the sale proceeds of the land to be invested in purchase of a new residential property at Chennai be subjected to tax under LTCG.
I had bought Commercial Property in January 2011 (i.e January 2011 is my Date of Allotment) for Rs. 23 Lakhs.
I registered Agreement for Sale in April 2015 for Amount consideration of Rs. 23 Lakhs which I had paid to the developer in installments from January 2011 till April 2015.
Now in December 2015 I intend to Sell this property for Rs. 45 Lakhs.
My queries are:
1) Whether the difference of (i.e Profit) of Rs. 22 Lakhs is treated as Short Term Capital Gain Tax or Long Term Capital Gain Tax?
2) How can I save my Taxable amount?
3) After Selling this commercial property in December 2015, If I buy Residential Property and use this taxable amount of Rs. 22 Lakhs or entire amount of Rs. 45 Lakhs in buying Residential property, will I be exempted from Tax?
4) If not residential property, then what are the option of saving my tax?
Regards,
Mehul Ved
I bought aN agricultural land in 2008 for 165000 and now I am gettinG 1500000 15lakhs then what will be the capital gain.
and how much tax I must may.
Pls confirm.
Thanks
My Father had sold a land which he has got under inheritance and now as to calculate capital gain tax on the sale,fair market value of that land as on april 1981is required.
so please suggest me as to how should I get the fair market value as on april 1981.
Thanks
Regards
Mayur
My Father has sold a land which he has got from inheritance and now as to calculte capital gain tax I need fair market value of the land as on april 1981, so please suggest me how should I get fair market value of that land as on april 1981.
Thanks in advance.
Regards Mayur
i purchased a land and plinth on 26/6/2007 fr rs.1281600 and rs.4058400 respctvly.stamp duty value paid is rs.107230 for land and rs.100 for plinth.i sold the property on 10-9-15 for rs.16000000.how do i calculate my capital gains and tax on it
I have bought residential property “A” in 2006-2007 for 25 lacs. I bought another residential property “B” in 2012-2013. Now i want to sell property “A” in 2015-2016 for 180 lacs & buy another property with the capital gains which comes around to 130 lacs after indexation. So can i get exempt from capital gains tax if i buy another residential property against this amount? I am asking because i have property “B” as well.
Thanks in advance
Regards
Parag
Under Section 54, which is the relevant section that is applicable to a corporate body (Pvt. Ltd. Co.) for sale of
a. residential property?
b. commercial property?
i had purchased a residential plot in 1984 for rs 88,000/-. i sold it on sep 2014 for rs 48 lacks. i intend to purchase a agriculture land from the above income. can i claim exemption of income tax for this long term capital gain . please guide.
I have question:
I have sold an old asset (residential/flat) in APR 2014 and made profit of 5L. Which is considered as capital gain.
as on today 1st Sep 2015 – I have not invested in NHAI bonds; Did not deposit in capital gain scheme. I am planning to buy a new house next month. I have not yet submitted the tax returns for the FY2014-15 (AY2015016) yet. Can I claim exemption? as I can buy new property in 2yeards from sale date?
Hi,
While calculating capital gain, according to the double deduction on interest, Can we apply indexation on the balance amount (after deducting the interest from the selling price)
Say, if i bought a house in 2008 at 10lakhs and sold it on 2014 at 25lakhs. I have paid an interest of 6 lakhs during this period(say). What will be the capital gain. Is it 25-6 = 19. Do we have to apply indexation on this 19 lakhs to know the actual capital gain..Please let me know your answer
Hi,
While calculating capital gain, according to the double deduction on interest, is Indexation also applicable.
Say, if i bought a house in 2008 at 10lakhs and sold it on 2014 at 25lakhs. I have paid an interest of 6 lakhs during this period(say). What will be the capital gain. Is it 25-6 = 19. Do we have to apply indexation on this 19 lakhs to know the actual capital gain..Please let me know your answer