23 May 2016
If a office is sold in month of July 2016 for one crore.index cost is 30lac and fifty lacs is invested under 54ec and tax paid on remaining 20 lacs.Now another office is sold in January for fifty lacs,indexed cost is 15 lacs and remaining capital gain is invested in 54ec bonds in April 2017 will I get LTCG exemption under this strategy.If my other income is 30 lacs than my total in come for year ended31/3/2017 will be 30 20= 50lacs is this right.(I ask this because I want to know that my income does not go above one crore than I will have to pay 15 surcharge.).
11 September 2016
Sir I know that for the first property I sell and when I deposit rs fifty lacs in current year within six month I will get exemption but my main query is for second property which I will sell in January and deposit the money in next financial year in April will I get exemption for that also to make it clear Two property sold and money paid for tax saving bond in the same year for one property and money paid for second property in next year (but within limit of six months from sell).Kindly advise.
03 August 2024
Here's a detailed response to your query regarding the Long-Term Capital Gains (LTCG) and exemptions under Section 54EC and other related considerations:
**Office 2:** - **Sale Date**: January 2017 - **Sale Price**: ₹50 Lakhs - **Indexed Cost**: ₹15 Lakhs - **Capital Gain**: ₹50 Lakhs - ₹15 Lakhs = ₹35 Lakhs - **Amount Invested in 54EC**: ₹35 Lakhs (in April 2017, within 6 months from the date of sale)
### **2. Exemption Under Section 54EC:**
**Section 54EC** provides exemption for investments in specified bonds (like bonds issued by REC or NHAI) within 6 months from the date of sale.
**For Office 1**: - Since you invested ₹50 Lakhs in 54EC bonds within 6 months of the sale (July 2016 to January 2017), you are eligible for exemption on ₹50 Lakhs of capital gains from the sale of Office 1. - Taxable Capital Gain for Office 1 after exemption = ₹20 Lakhs
**For Office 2**: - Since you invested ₹35 Lakhs in 54EC bonds within 6 months of the sale (January 2017 to April 2017), you are eligible for exemption on ₹35 Lakhs of capital gains from the sale of Office 2. - Taxable Capital Gain for Office 2 after exemption = ₹0 (₹35 Lakhs invested in bonds)
### **3. Total Income Calculation for FY 2016-17:**
- **Income from Other Sources**: ₹30 Lakhs - **Taxable LTCG from Office 1**: ₹20 Lakhs (after exemption) - **Taxable LTCG from Office 2**: ₹0 (after exemption)
**Total Income for FY 2016-17**: - **Total Income** = ₹30 Lakhs (other income) + ₹20 Lakhs (taxable LTCG from Office 1) = ₹50 Lakhs
### **4. Surcharge Implications:**
For the Financial Year 2016-17: - **Basic Tax Rate**: 20% on LTCG (with indexation) for amounts exceeding ₹2.5 Lakhs - **Income Tax Surcharge**: - **10% surcharge** if total income exceeds ₹50 Lakhs but is less than ₹1 Crore. - **15% surcharge** if total income exceeds ₹1 Crore.
In your case: - **Total Income** is ₹50 Lakhs, so no surcharge applies since it is below ₹1 Crore.
### **5. Tax Filing and Exemption Confirmation:**
- **Investment in 54EC Bonds**: Ensure that you have the necessary documentation proving investment in 54EC bonds. - **Filing Returns**: Report the LTCG in the appropriate schedule of your income tax return. You should mention the amount exempted under Section 54EC and the remaining taxable capital gains.
### **Summary:**
- You are eligible for LTCG exemption on both properties under Section 54EC as long as investments are made within the stipulated period (6 months from the date of sale). - For Office 1, ₹20 Lakhs of LTCG is taxable. - For Office 2, the entire ₹35 Lakhs LTCG is exempted. - Your total taxable income for FY 2016-17 will be ₹50 Lakhs, and no surcharge will apply.
### **Additional Tips:**
- **Documentation**: Keep all receipts and documents related to your investment in 54EC bonds as proof. - **Consultation**: It is advisable to consult a tax advisor or chartered accountant to ensure compliance and accurate filing based on your specific situation and updated laws.
This approach ensures that you maximize your exemptions while complying with tax regulations.
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