Capital Gains Tax calculation

1. Kindly mention month of purchase of flat and month of renovation of flat.

2. Stock market loss is long term or short term loss?

1. Your Long Term Capital Gain on sale of the house for FY 17-18 is Rs. 22,99,887

2. You cannot adjust it with loss on options but you can further save your tax by making certain investments as per section 54.

LTCG would be Rs.22,99,890 and capital gain tax would be Rs. 4,73,780/-.

Normally loss from option dealing is treated as speculative business loss depending on the volume and frequency of the transactions. If it is treated as STCL then it can be set off against the LTCG resulting in to capital gain of Rs.20,42,890 and tax liability of Rs.4,20,835/-

Thanks

Hi,

Short term capital loss can be set off against Long Term Capital Gain.

So if you are showing your trading in futures and option under Income from capital gain or loss, then you can set it off.

Remaining capital gain amount you can invest under Section 54.

Hi,

Please find below the detailed calculation:

Indexed cost of acquisition=724730×272÷129=1528113

Indexed cost of renovations = 200000×272÷200 =272000

Total cost of acquisition = 1800113

Capital gains =4100000-1800113=2299887

The loss from stock market cannot be set off against this long term capital gain. You can invest the capital gains in specified bonds to get exemption under sec 54.

Hope this clarifies.

Regards,

Nikhil.

Hi,

Yes you can utilised the amount. Date of completion of construction and not date of commencement of construction relevant for purpose of sec.54 ,

this is a case law supporting your case [TS-51-ITAT-2015(HYD)-O], [TS-6111-ITAT-2014(MUMBAI)-O]

Yes, you can utilise the capital gains for the said under construction property.

Regards,

Nikhil.

You need to invest the entire capital gain of Rs. 22,99,890/- in the under construction property (assuming property is still under construction) within 3 years form the date of transfer i.e. March 2021. If the house is ready to move, time limit is two years from the date of transfer i.e. March 2020.

The due date to file ITR for A.Y. 2018-19 is 31.07.2018 so you need to think before time otherwise deposit amount in CGAS and invest later on to avail the exemption u/s 54.

Thanks

Hi,

Capital gain would be approx. 23 lacs. If the stock market loss is shown under the head of capital gain then you can adjust this loss against capital gain.

Further, yes you can invest the amount in construction of house and get the exemption under section 54.

Please feel free to call/ revert in case you need more clarity

Thanks and regards

Abhishek Dugar

CA CS B.Com

Date of Purchase of Property is Sep. 2007 (2007-08) Cost Rs. 7 Lakhs Index at 129

Date of Renovation of Property is Jan 2013 (2012-13) Amount Rs. 2 Lakhs Index at 200

Date of Sale of Property is Mar 2018 (2017-18) Amount Rs. 41 Lakhs Indext at 272

Long Term Capital Gains Tax shall be calculated as under:

Cost of Acquisition is 7 Lakhs x 272 / 129 = Rs. 14,75,969

Cost of Registration is Rs. 24,730 x 272 / 129 = Rs. 52,144

Cost of Improvement is 2 Lakhs x 272 / 200 = Rs. 2,72,000

Total Cost = Rs. 18,00,113

LTCG = Rs. 41,00,000 - Rs. 18,00,113 = Rs. 22,99,887

However,since you have short term capital loss from trading of shares of Rs. 2.57 Lakhs, it will be allowed to be set-off against LTCG.

Hence, net LTCG shall be Rs. 22,99,887 - Rs. 2,57,000 = Rs. 20,42,887

However, since you also said that the stock market loss is in F&O segment, it cannot be considered as Capital Loss (neither short nor long) since actual delivery of shares doesn't take place while dealing in F&O segment.

Hence, your net LTCG shall remain Rs. 22,99,887/- (Although I have calculated the reduced amount, in case the loss is from spot trading of shares)

In addition to this, you can save your tax outgo on LTCG by investing the amount in another residential house within 12 months before the actual date of sale or after 2 years from the date of actual sale or constructing another house within 3 years from the date of sale.

As such, if the possession of the under construction property is received in Feb 2019, which is less than 3 years from the date of sale, benefit of exemption can be availed by you on this.

Regards,

Hi

The capital gains come to around 29 lacs.

If your losses were shown as capital losses, set off is possible.

Yes, the investment in under construction property would be eligible for claiming capital gain exemptions.

Your capital gain will come to approx 23 lac.further you can claim exemption for purchase of under construction project .yes u can utilise the amount for payment of said purchase.