Rajesh (Professional) (44 Points)
26 June 2010Hi friends,
I sold my resident flat after three year of it's purchase,
Purchase cost was 12,00,000/-
Sale price: 17,50,00,00/-
The difference amount i have invested in my New proprietorship business,
my question is,whether i am liable to pay any capital gain tax on the difference amount or this amount will be added in my total income where i have to pay income tax.
Please reply
Regards
SIVASIVA
(FCA, Future CA)
(4935 Points)
Replied 26 June 2010
1. The difference of Sale price and Purchase price(after indexation) is the gain which you have made.
2. This gain is called Long term.
3. The Sale price is subject to deduction of any intermediary expenses like brokerage, etcetera.
4. The point which you have made that the proceeds had been invested in business is IRRELEVANT.
5. Definetely you have to pay tax on the Net gain apart from your other income.
anyway, this is my view only
comments of senior members are awaited.
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 26 June 2010
dear rajesh
first of all since the property u sold is a kind of long term assets so calculate purchase cost after indexation.this will decrease the difference amount of ur net gain.yes sure u are required to paid capital gain tax as my friend sivasiva submitted.since the investment made by you is not fall under the provisions of sec.54. u can not claim any exemption on the basis of information u submitted.
regards
tarun rustagi
CA Saurabh Shukla
(Accounts Executive)
(223 Points)
Replied 27 June 2010
I agree with my frds Tarun & Siva.
But, If you want to save Tax on such Capital Gain You can consider Sec 54, 54EC & 54F.
CA. Abhishek K. Pandey
(Manager (Advance))
(901 Points)
Replied 27 June 2010
Dear Rajesh, obviously your capital gain will be subject to tax.
As per sec. 54, it would have been exempt, if the house is held for more than 3 years, and you purchase a new house within one year before or two years after the sale of original asset, or a new residential house is constructed within three years. The cost of new asset (residential house) should be more than the amount of capital gains.
Any other long term capital gain is exempt if the capital gains are invested within 6 months in 3 year bonds issued by REC or NHAI and that investment is retained for three years. Investment cannot exceed Rs 50 lakhs - section 54EC of Income Tax Act.
Also, you are wrong in your contention that it will be added to your total income. See, it is a LTCG, if the asset is held for more than 36 months, consequently, it will be taxed @ 20% after indexation or 10% before taxation.
PRATEEK
(ACA)
(102 Points)
Replied 27 June 2010
AS THE ASSET IS BEING HELD FOR MORE THEN THREE YEARS HENCE IT IS A LONG TERM CAPITAL ASSET.THEREFORE THE DIFFERENCE BETWEEN THE SALE PRICE AND INDEXED COST OF ACQUISITION WILL BE YOUR LONG TERM CAPITAL GAIN AND THEREFORE IT WOULD BE TAXABLE @ 20%. INVESTING THE GAIN AMOUNT IN A NEW PROPRIETERSHIP BUSINESS IS NOT ALLOWED AS A DEDUCTION .
PRATEEK
(ACA)
(102 Points)
Replied 27 June 2010
DEAR ABHISHEK,
I'LL LIKE TO BRING TO YOUR NOTICE THAT TAX RATE @ 10% WITHOUT INDEXATION IS NOT ALLOWED ON A RESIDENTIAL HOUSE PROPERTY . IT IS ALLOWED ONLY IN CASE OF LISTED SECURITIES,UNIT OF UTI OR MUTUAL FUND WHICH HAS BEEN HELD FOR MORE THEN 1 YEAR I.E LONG TERM CAPITAL ASSET
manisha ahuja
(article clerk)
(147 Points)
Replied 27 June 2010
u wud b taxed @ 20%
as u dint take ny advice
u cant undo wat u hv done..............
Nitin Grover
(CS)
(1228 Points)
Replied 27 June 2010
Dear Friend
u have to pay tax on remaining amount
Sales Consideration 17,50,000
Less :Indexation Cost 12,00,000* Indexation of Sold Year / Indexation of Purchased Year
of Acquis. (amount will be more than 12,00,000)
Less : Other Expenses : i.e Commis/Brok, etc
Remaining Long Term Capital Gain (LTCG) less utilized u/s 54, etc
Tax Payable 20% on LTCG but before this adjust amount with your Income if yours income is below than 1,60,000 (The Balance Amount).
Regards
Swapnil Bhosale
(12 Points)
Replied 09 July 2010
dear friends
Mr X & Mrs X purchase house property in 2003 2,00,000/- bt the payment was made by Mr X only.. no investment from Mrs X.
the said property ws sold out in 2010 for 12,00,000/- and money received was deposited in joint account of Mr X & Mrs X .
Mr X withdrawl full amount from the account. now so please give me to whom & how much the capital gain will be taxable.
Mr X & Mrs X want to invest money u/s 54EC NATIONAL HIGHWAYS AUTHORITY INDIA so How much Mr X & Mrs X should invest & should they invest jointly in 54EC or sepertely for tax exemption u/s 54ec.
DT Fundas - Tarun rustagi
( Author)
(1150 Points)
Replied 09 July 2010
dear swapnil
if the property is in joint name then they can divide the amount of capital gain between them.they both can claim exemption according to investments.they can purchase two house or one house in joint name.
regards
tarun rustagi
CAclubindia
