LTCG tax

Hi,

Hope you are doing well !

Please find below the LTCG:

Sale Value- Rs. 62,00,000

Indexed Cost of acquisition (15,32,000/117*280) Rs. (36,66,325)

LTCG Rs. 25,33,675.

** Cost Inflation Index for FY [deleted] and for FY [deleted].

Also, you can involve cost of improvement , if any incurred on property.

Thanks & Regards,

Payal Chhajed

Cost of flat will be indexed as 1532000 x 280 / 117 = 3666324. Long term capital gain would be [deleted] = 2533675. The gain of Rs 25.33 L can be invested in another house or in NHAI/REC Bonds. The new house should not be sold within 3 years from purchase/construction or the bonds should not be sold within 5 years from the date of purchase. You can reduce the sale amount by brokerage paid if any. The cost of flat of rs 15.32 L can be increased if you paid stamp duty/registration/brokerage above that.

54EC Bonds are one of the best ways to save long-term capital gains tax. Tax deduction is available under Section 54EC of the Income Tax Act. The maximum limit for such investments is Rs. 50,00,000.The eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India).

Key features of 54 EC Bonds

- Safety and security : AAA rated.

- Interest : Taxable, although no TDS is deducted. Wealth tax is exempted

- Tenure- Lock-in period of 5 years and non- transferable.

- Minimum investment is 1 bond amounting to Rs. 10,000/- and the maximum investment is 500 bonds amounting to Rs 50 lakhs in a financial year

- Rate of Interest 5.25%, payable annually

Yes, you need to park only Rs 2533675 in Capital gain account & use rest of amount anywhere.

Further, you can include stamp duty/registration charges /brokerage in your cost , if you have paid but the indexation benefit available from the year you have paid the charges not from the purchase year i.e 2005 -06 .

Hi

As computed, the capital gains of 25.33 lacs shall be taxable @ 20.8%.

If you don't want to invest in another residential house property now or within 2/3 years, the only option for exemption is 54EC bonds.

You can purchase bonds for the capital gain amount I.e. 25.33 lacs and no taxes shall have to be paid.

Please note that if you go with the bond option for exemption, the bonds shall be redeemable after 5 years. I repeat, 5 years and not 3 years.

Also, you can consider cost of improvements over 13 years of holding the property if there are valid proofs for the same. This would thereby decrease the capital gains.

Yes, you need to invest capital gains amount only; not the entire sales consideration. Amount needs to be invested in bonds.

You can park it in capital gain account if you want to invest in residential house property within 2 years.

All the cost which has been incurred for cost of acquisition can be claimed as deduction. So you need to consider that also. This additional expense which you would have incurred can get you away with the need to park money.

* provide additional information to give you better solution

Dear Sir,

You can invest in bonds within six years from the date of transfer and the limit is RS.50 lacs.

Thanks

Indexed cost of the flat = 1532000*280÷117= 3666325

LTCG =62L-3666325=2533675

You can also take the benefit of any brokerage cost that you paid at the time of purchase of the property. Similarly if you have incurred any cost on the improvement of the flat that can also be added to the cost while computing capital gains.

Hope that clarifies.

Regards,

Nikhil

If you do not want to invest in residential property then you can invest in the specified bonds. You will need to invest 25.33 lakhs in bonds. These bonds have a lock in period of 5 years.

Regards,

Nikhil.

Hi

Your long term capital gains will be INR 25.33 lacs and it shall be taxable @ 20.8%.

The best way to save tax apart from investing in residential house property it to invest in NHAI/ REC bonds within 6 months from the date of sale of the property.

If you purchase bonds for the capital gain amount I.e. 25.33 lacs your entire capital gain shall be exempt.

You need to give details of this exemption in your return of income.

Please note that option of putting the money in cgds scheme is not available for you.thia option is applicable only for those people who intends to buy another residential house Property.

Since you want to buy bonds, you can deposit the money in cgds account.

Here is your answer,

Answer (A)

Income under capital gain shown as below:

gross sale consideration 6200000

less: brokerage or any other selling expenses 0

Net sales consideration 6200000

less: indexed cost of acquisition(1532000/113*280) 3796106

less: indexed cost of improvement 0

Long term capital gain 2403894

Here is your query relating to any other expenses, you can show brokerage & cost of improvement as your further expenses to reduce your tax liability.

Answer(B)

taxpayer, who has sold a house,apart from purchasing house property has the option to invest the gains in 54EC bonds to save tax on those gains within the specified time period. LTCG tax will not be payable on the amount of gains so invested.Therefore, all the bonds specified under section 54EC issued on or after 1 April, 2018 will come with a tenure of five years. If the bonds are redeemed before the completion of five years, then you will lose the tax benefit.

however interest receive on such bonds would be taxable

Answer(C)

As per provision of income tax act 1961, amount of capital gain(which in this case 2403894) must be deposited in capital gain account scheme before the due date of income tax return filling i.e. 31st july,

However, this amount can be withdrawn afterwards for the purpose of any investment under sec 54,54EC.

there is no tax implication on rest of the amount

Thank you

Hello Shiv Kumar Agarwal ji,

You have mistakenly taken indexation year 2004-05 for cost because he bought this property in year (29/12/2005) FY 2005 -06 for Rs 1532000.

This is just for your information.

Thanks & Regards,

Payal Chhajed

Hi,

As per the section 54EC of the Income Tax Act, such capital gains are to be invested in these bonds within six months from the date of transfer, irrespective of whether those six months expire in the next financial year or not.

Thanks & Regards,

Payal Chhajed

Hi Sanjeev,

1.You need to invest in 54EC bonds upto 21st December 2018 i.e within six months from the date of transfer.

As per Mr Agarwal Ji, you need to deposit in capital gain account scheme before the due date of ITR filing i.e. 31st July 2018 . Both are different things.

2. You can buy online 54EC bonds from any bank. It is a very simple procedure.

Thanks & Regards,

Payal Chhajed

Within six months from 21.06.2018 i.e. 21.12.2018.

Hi Sanjeev

You need to invest the capital gain amount in bonds upto 21st Dec 2018.

The July deadline is not applicable for you. It is only applicable for those who want to invest in a residential house property.

You can invest the capital gain amount in bonds upto 21st Dec 2018.

Regards,

Nikhil

Hi,

1.Investment in bonds to be done within 6 months from the date of sale,that is within 6 months from 21st June 2018.

2.Can be bought online.

Hi,

1. The last date to buy REC/ NHAI bonds is 30 December 2018 (i.e. 6 months from the date of sale)

2. You can buy these bonds through any of the broker. Some of the banks also acts as an intermediary to sell these bonds.

Dear Mr. Sah,

Time limit to buy Capital Gain Bonds issued by REC/NHAI u/s 54EC is six months from the date of sale. So, in your case, it will be on or before 20-Dec-2018.

I can assist you in Investing in Capital Gain Bonds. You can contact me by e-mail / phone call anytime between 10 am and 5 pm Monday to Saturday