13 January 2015
A man purchased a land in 2001 @ 125000 and it is sold in 2010 @ 1300000.He utilised this amount to purchase another land in his wife's name in 2010. What are the expenses we can claim? Can we deduct expenses at the time of purchase as well as sale? Can we reduce commission paid while capital gain computation? How can we reduce the capital gain?Is there any exemption? Any case laws?
13 January 2015
On transfer of land which was held for a period of ( yr 2010-2001 yr)9 years is a long term capital gain.Such capital gain has to be utilized in specified assets to get exemption.Such specified assets are 1- a residential house.2. RECC/NHAI Bonds.Such an investment is to made in case of residential house within 2 years( for purchase) or 3years ( for construction). For Bonds of RECC/NHAI before the due date of filing of IT Return.These are the conditions, in brief, to get exemption from Long Term Capital Gain Tax. But in your case, LTCG arised to Husband but he invested in his wife's name.Eligibility is for residential house, it should be constructed within 3 years of sale of the property. In your case as the land is purchased in his wife's name, he should get it transferred to his name or he should construct jointly alongwith his wife and the cost of such construction to his part of the share should not be less than Rs.13 lakhs( consideration received by him) to get full exemption of the LTCG tax. Hope I am clear.
CAclubindia
