Capital gain and TDS

Capital gain and TDS

Hi,
I had brought a pre launch property in 2014 for 46 lacbin me and my wife's name, the agrment to sale was executed between builder and me in May 2016, the property is ready now and OC has been received, I have not received the sale deed yet, hence property is not yet registered in my name.
Now I want to sell the property for 60 lac.

1.is capital gain applicable in this case?
2. Will this be a short term or long term capital gain?
3. How can I save tax on gain?
4. How much will be taxable amount on what percentage?
5. On the sale of property to new buyer how will TDS work, who need to pay and who can claim it in what conditions?

Asked 5 years ago in Capital Gains Tax

Hi,

- Yes

- LTCG

- By investing either in bonds or new residential house property.

- Tax @20.8%

- Buyer will deduct TDS@1% of 60 lacs and you will claim TDS credit at the time of filing of ITR.

Vivek Kumar Arora

CA, Delhi

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LTCG is applicable also if the property is not registered and even sale deed is not issued?, What would be taxable income considering the depression into account.

Asked 5 years ago

On the basis of agreement to sell.

Vivek Kumar Arora

CA, Delhi

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Yes capital gain will be applicable on this as you are selling your right in the property.

It will be a long term capital gain considering you have received allotment letter on such property in 2014.

Capital gain would be sale consideration 60 lakh less indexed cost of acquisition 53 lakh i.e. 7 lakh.

Capital gain tax on same would be around 1.4 lakh.

In this case there will be no TDS required to be deducted as you are not selling any property but only the right in the property.

You can save capital gain tax by investing in new house if you own only one house now under section 54F.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo

CA, Jaipur

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Hi,

Hope you are doing well !!

1.Yes, capital gain will be applicable.

The right to receive a property is a valuable and a transferable right which falls within the ambit of “capital asset” under the provisions of the Income Tax Act.

2. It will be long term capital gain (Assuming you have received allotment letter in FY 2013-2014).

3. You can save tax by using the amount you gain from selling an asset to buy bonds issued by NHAI and REC u/s 54EC.The bonds should be bought within 6 months of the sale of the asset. The maximum amount you can invest in this way is Rs. 50 lakh. However, it will lock your money for 5 years.

4. The long term capital gain amount would be Rs. 6. 33 lakh i.e (Rs. 60 lakh- (Rs 46 lakh *280/240)).

It will be taxable @ 20% plus applicable surcharge & cess on Rs. 6.33 lakh.

5. The buyer will have to deduct TDS at 1% of the total sale consideration.

Thanks & Regards,

Payal Chhajed