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Capital gain

POOJA (ARTICLE ASSISTANT) (169 Points)

18 July 2014

assese had purchased residential property(long term) through GPA( general power of attorney) in co- ownership now he wants to sell this property, and the sale consideration will be received in his bank account.what are the tax implications and how could he save tax?

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7 Replies

CA. sanjeet Kumar Ojha (Chartered Accountant) (272 Points)
Replied 18 July 2014

Residentail Property is a Capital Assets. When Capital Assets is transferred for profit or gains , then this profit or gains is treated as Capital Gain.

The Gain is either Long Term Capital Gain or Short term Capital Gain is dependent up on the period of holding. if period of holding is more than 36 Months then it shall be treated as LTCG and if less than 36 months, then STCG.

You have mentioned that profit from this transfer is LTCG.

LTCG from transfer of Residential property is taxed @ 20%.

However if you invest money in new residential property, then you can take the Exemption of LTCG under section 54. Time limit is 2 years for purchase and 3 years for construction.

you may also invest in Long Term Specified Assets NHAI or Rural Electrification Corporation and take the exemption under section 54EC. Time limit is 6 Months. Lock in period is 3 Years.

Hope, reply is satisfactory.

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POOJA (ARTICLE ASSISTANT) (169 Points)
Replied 18 July 2014

but its co- ownership property and amount received will be distributed among co-owners, how this is to be treated?

subhash kumar jha (PROFESSION) (445 Points)
Replied 18 July 2014

Make on power of attorney for sale also and cheque ghuma do co owner ke account me for his share and compute capital gain for ur portion only.

CA Keval desai (Transaction advisory service) (231 Points)
Replied 18 July 2014

Originally posted by : POOJA
	but its co- ownership property and amount received will be distributed among co-owners, how this is to be treated?

Proceeds of Assets will be divided in the mutually decided ratio between co owners.

then individual co owners share will be considered gross sale proceeds, from which u can deduct selling expenses and Indexed cost of Aquisistion (proportinate) . balance amount should be invested in NHAI bond within stipulated time frame.