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Am i liable to pay advance tax if my income is below 2,50,000/-

18 July 2019

I had bought a property for 19 lakhs in 2010 and sold it in dec 2018 for 49 lakhs. Prior to selling, I had rented it out and in FY 18-19 my total rental income was 50,000/-. After sale,the proceeds were invested into FD. So interest income for FY 18-19= 95,000/-. I have no salary or business income in FY 18-19 or any year prior to that and have never filed returns. So my total income for FY18-19 is 95000+50000= 1,45,000/- which is less than basic exemption limit of 2.5 lakhs. Was I liable to pay advance tax? Does my capital gain put me in the 3rd tax bracket of 30% tax or is LTCG separate from income tax?

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4 Replies

siddhesh (si) (198 Points)
Replied 18 July 2019

Dear Sir/Madam

If you sold the property it results in capital gain and such income is taxable in your hand are as follows

Full Value of Consideration 49,00,000

Less:- Expenses with respect to transfer No details available

Net Consideration 49,00,000

Less:- Index Cost of Acquisition 31,85,629

(19,00,000*280/167)

Long Term Capital GAIN 17,14,371 RS

If RS 17,14,371 is invested in Capital Gain Fixed Deposit Scheme then it should be lock for 3 years and interest on FD is available. and Rs 17,14,371 should be exempt.

But according to question it is normal fixed deposit made by you as per my think

in that case whole some of RS 1714371 is taxable.

also rented income from house goes to the House property income and FD interest income goes to Income from Other sources.

Considering the above, Advance tax on capital gain is applicable when it is received and not on accrual basis . In this case the Advance tax next due date to pay tax is applicable and it is 15th DEC if arises before 15 th DEC or otherwise 15th march .Any payment made till 31 st March is also treats as advance tax.

Considering Above Provision , You are liable for advance tax and if the advance tax is not paid within due date you are liable to pay interest @ 1% p.a on tax.

Yes If you are not invested in Capital Gain Account Scheme of Bank as a FD of such capital gain calculated above it is more than RS 1000000 so it put you into 30% tax bracket. but there is an alternative to resume from such tax is You can invest Capital Gain Amount before filing return of income in respective branch of bank allowed in the Capital Gain account scheme in that case Capital Gain is exempt and you are not liable to pay tax because considering the above FD interest and Rent income is RS 190000 only and it is below the threshold limit of RS 250000. Therefore any tax deducted as TDS claim as Refund from Government.

If My Opinion is wrong please correct me for improvisation my knowledge.

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NSDL Cloud (18 Points)
Replied 18 July 2019

Thanks Siddesh

Additional details:

The property was bought by my dad in 2010 and gifted to me by him in nov 2014(had to pay 1,05,000/- as stamp duty and registration in 2014). So i had to pay stamp duty and registration twice- once by my dad in 2010 and next by me in 2014. How to add the amount paid in 2014 to cost of acquisition?

how to compute cost of acquisition in the scenario outlined below?

cost of acquisition:

flat purchased by my dad in 2010 for(incl stamp duty and registration): 1895230/-

flat transferred to me as gift by my dad in 2014 and I paid stamp duty and registration: 1,05,040/-

can i club the two and consider that as the cost of acquisition? i.e 1895230+1,05,040=2000270/-

Alok Singh (209 Points)
Replied 18 July 2019

difficult

siddhesh (si) (198 Points)
Replied 18 July 2019

Dear Sir,

The stamp Duty Value and Registration fee is deductible under section 80C to the extent of Rs 150000 in aggregate with other investment.

In Case of Cost of Acquisition we Calculate two ways are as follows

1) As per income tax act 1961

Cost of acquision without Stamp duty and Registration Charges*Cost inflection index of year of transfer (PY 2018-19 i.e 280)/ cost infletion index for the year of first hold (PY 2014-15 i.e 240)

2) Manjulla Shah Case Law (Bombay High Court)

Cost of Acquision without stamp duty and registration Charges*Cost inflation index for the year of transfer ( PY 2018-19 i.e 280)/ Cost Inflation Index for the year of previous owner( PY 2009-10 if Purchase within the period Jan 2010 to March 2010 in that case CII is 148) or (PY 2010-11 if Purchase within the period Apr 2010 to Dec 2010 in that case CII is167)

CII means COST Inflation Index.

Calculate in both ways which are more beneficial to you can follow such calculation

if any wrong is specified please clarify me