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acceptance of money towards settlement of court matter

anup (trainee) (89 Points)

16 January 2019

Hello

My father has been fighting a property court matter for years. Now that matter is headed for mutual settlement for which we will receive amount of Rs. 30 lakhs approx.

How should we receive the money? Cash, DD or any other way? Also what options are available for evading income tax.?

Thanks

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7 Replies

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 16 January 2019

better way to receive the amt through electronic mode or DD. This wud be taxable as capital gains. however you can invest the same in capital gains bonds under 54EC and claim exemption

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MOHAMMED IMRAN (1020 Points)
Replied 16 January 2019

you can pay money in any form, but it is advisable, you can take money in account payee cheque or account payee demand draft or through electronic clearing system

tax evasion is illegal, you can pay capital gains tax ,if any
but you can save tax through proper tax planning
- for long term capital gain
1. u/s 54 you can invest the money for acquiring one residential house property in India
2. u/s 54EC invest in BONDS OF NHAI or RECL or any other bonds notified by the central government (redeemable after 3years)

#for further information please reply

anup (trainee) (89 Points)
Replied 16 January 2019

If i receive the amt by ac payee dd, how much tax will I be charged?

Reg long term capital gains point 1 (sec 54), can I buy a flat using that money?

Also, short term capital gains is charged at what rate? Pls answer in detail

Thanks

Giridhar S Karandikar (Team Lead) (7548 Points)
Replied 16 January 2019

you will liable to capital gains tax when money us recd in your bank through dd/ electronic mode
however you can claim exemption under 54 F by investing the entire sale consideration in a residential house property else in capital gains bonds upto max 50 lacs under 54EC.

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MOHAMMED IMRAN (1020 Points)
Replied 16 January 2019

in the above case - if the property is held for more than 36 months then the gain arising from such transfer is chargeable to tax as long term capital gain
capital gain =
full value consideration. xxx
LESS
- expenses wholly and exclusive incurred for the purpose of such transfer
- index cost of acquisition ( for long term capital asset)
-index cost of improvement
the final amount is long term capital gain

for further information , can you please specify the type of property and holding period of the property

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anup (trainee) (89 Points)
Replied 16 January 2019

the property (land) was subjudice for tenancy matter for almost 3 decades. the compensation amount offered to us is approx 30 lakhs.

1. will it attract both income tax as well as long term capital gains tax? the rate of the same

2. can i buy a flat from the amount as an investment? if i do so, will i get complete rebate from the tax?