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Ltcg on sale of urban non agriculture plot

Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)

02 December 2015

Hii all,

if one individual sold one NA plot of land within muncipal corporation limit for Rs.say 1Crore. which was alloted to him by heritage from his grand parents.

and if that individual is founder director of one company, in which he would like to introduce that money as unsecured loanthen what will be the taxability.

or otheriwse any other better tax plannings are available to him..

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6 Replies

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 02 December 2015

If the land is sold the only option left is to invest in bonds as mentioned in 54ec upto rs 50 lacs with lock in period of 3 yrs and later the liquidation of the said bonds will again attract capital gains once limit of 3 years expire. It is the case with every exemption of capital gain, it is just a postponement of taxing meaning tax will be charged when the newly accquired asset will be sold. Thus as far as business goes i think giving the said proceeds for taxation would be better as this would be helpfull for your business as capital.

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CA Goutam Sharma (Chartered Accountant in Practice) (468 Points)
Replied 02 December 2015

Why are you selling the asset.

Motgage it and take a loan, Then forward this loan to company at a rate slightly higher than the rate at which yu borrowed it. No Capital Gain in anyone's hand. Marginal net interest income in Your Hand

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Mukesh Kuriyal (Advocate) (2216 Points)
Replied 03 December 2015

One can buy RFC bonds or NHAI BONDS within a period of six months after date of selling

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Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)
Replied 21 December 2015

Dear Gautam Sir,

Thanks a lot for your suggession... its really a good tax planning..

Thank u so much..

Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)
Replied 21 December 2015

Dear Karthik Sir,

Thanks a lot for your valuable advice. its really helpful to manage cash flow for business.. as just to postpone tax why should i invest such a bulky amount in lock in period investment... your and gautam sir's both suggessions are welcome...

thanks a lot..

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Piyush Sancheti (HEAD TAXATION CHEMICAL MFG CO) (307 Points)
Replied 27 December 2015

sir, to the best of my knowledge, 54 EC bonds are tax saving bonds, i.e. on redemption its not taxable again or no need to purchase new exemption asset. kindly confirm if you have any judgment of section reference support on "postponement of tax on invetsment in 54 Ec Bond"..