Capital gain tax on house

Tax queries 887 views 2 replies

kiran jhamnani

Finance Professional

119 Points Joined September 2013

A house has been sold in Jan-2014, this was the only home for the seller. He never filed any IT return, The land was purchased in 2005 and constructed in 2007-2007, during that period the person was NRI

Now when he sold the home in 2014, now living in rented home. First time he need to file the income tax return due to capital gain.

1) The capital gain will be considered as this Financial Years income? or the capital gain is separate from the income. His income is not in taxable bracket.

2) Capital gain account if he open in the bank, shoudl be before 31st march-2014 or He will get the time to deposit the money for capital gain account until July 15 just before filing the income tax?

3) What if at all it is needed to deposit the capculated capital gain value in the bank before 31st of march-2014 but he is not doing it until he file the return? if there is any consiquences for this?

4) What are the norms to release the Capital gain funds from bank? bank will pay this amount to the Party from where the new residential lend woudl be purchased? without any letter from IT

5) Bank will requrie the clearance letter from IT department to release this payment if the person is able get the property?

6) What if the person skip this process and wait antil another finalcial year end March-2015 to file the return (two year togther) with any late fee. during this one year he will be able to purchase the land and actually he is afraid to withheld the money in Capital gain account Fixed deposit. When buy new property without hastle! can he file the return for two year together. If there is any provision he himself go and give such kind of letter to IT department and ask them time?

The value of the property sold was 48 lakhs

Replies (2)

Z

Tax Consultation (US and India)

2970 Points Joined September 2011

Am typing via app it does not provides lines, all the text will appear is single para Yes cap gain will be considered as income in the year in which asset is sold & accordingly he will have to file return also (2) TIME limit for depositing in bank is till due date of filing of return that is till end of July (3)mitigated (4)(5)I recommend you read various forms under capital gain deposit scheme like FORM A is for application for opening am account , FORM C is for WITHDRAWAL of amount from account FOR UTILIZATION FOR SPECIFIED PURPOSES which would be any pmt for purchasing or installments etc . If amount is misutilized then amount is taxable to the extent funds are misapplied . There is FORM D for providing details regarding manner & extent of utilization ofamount withdrawn. FORM E for nomination WHAT IS THIS POINT 6 YOU ARE SAYING HE IS AFRAID OF PUTTING FUNDS IN A SCHEDULED BANK? It will deny you of exemption u/s 54/54f Either invest the money within specified due date of filing of return or invest in cgas Your client dont even has a valid reason . IT IS POSSIBLE TO NOT TO FILE RETURN BUT TO CLAIM BENEFIT IF AMOUNT IS DEPOSITED IN capitacapital gain account scheme & thereafter you file belated return , there is no requirement to file return to avail the benefit & there is a case to this effect

Arpit Pachisia

734 Points Joined July 2012

Answers to your questions are as follows:

1. Yes, capital gain will be considered as this years financial income. And return will also be filed upto july 2014.

2. He will get the time to deposit the amount in the bank a/c till the end of July 2014, last date of filing return for individuals.

3. As stated above last date is of July.

4. FORM C is for withdrawal of amount from account for utilising it in purchase of any other property or house. Payment must be made only in cheque directly in the name of contractor or seller or the case may be.

5. No approval of ITO is required in case you are making part payment to the other person till their is any balance left in your account. But in case, when you completely use the full amount of capital gain scheme, than you had to intimate the same to the ITO and provide them necessary documantary evidences for such payment.

6. Well you had to deposit the amount arise as capital gain to Capital gain scheme account, with this july only. Otherwise, you cannot claim the said amount of capital gain in next year, whether you file 2 year returns together it will not helps you. So it will better to invest the said amount before due date or to deposit the same in capital gain scheme account.

Thanking You