Captial Gain Tax for the property Sale

Dear Sir,

Hope you are doing well !!

To calculate the capital gain & long-term capital gains tax payable, the following formula is to be used:

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer),

In your case, there would be capital gain of  Rs 7,45,950.

It is calculated as below:

Sale consideration -Indexed COA (including stamp duty, taxes & other expense)= (Rs 55,00,00 - Rs 47,54,050 )=Rs 7,45,950. 

The indexed COA= Rs 39,48,000/240*289=Rs. 47,54,050.

The capital gain will be taxed at 20.8% i.e. 20.8% on RS 7,45,950.

To get capital gain exemption, you need to reinvest the amount either in new residential property or 54ec bonds.

Home loan and Capital Gains Exemption are two separate things. You can claim the Capital gain exemption only if you use the money from the sale of the property to buy another house. The purchase of new house has to be done one year before the sale of the house or  2 years after the sale of the house.  The property should be bought in the name of the seller.  Income tax department is not concerned if you used the sale money for repaying the home loan or not.

It is advisable to take a phone consultation for detailed discussion.

We may assist you in tax filings, tax calculations and entire procedure.

Yes you can get refund of your TDS on filing the income tax return.

You should thus, first calculate your total income and tax thereon. Thereafter, deduct TDS on the property to ascertain the tax payable to the government. Any excess of TDS over the final tax liability shall be refunded to you. 

We may assist you in filing income tax return.

When an individual sells a residential property and buys another residential property, he will be eligible for exemption under Section 54. Conditions to avail the benefit of exemption under Section 54 includes:

• The taxpayer (ie. seller) needs to be an individual or HUF. Thus, firms, LLP’s and companies cannot utilize the benefits of this section.
• Asset needs to be classified as a long-term capital asset.
• The asset sold is a Residential House. Income from such a house should be chargeable as Income from House Property
• The seller should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation)
• The new residential house should be in India. The seller cannot buy or purchase a residential house abroad and claim the exemption.

The above conditions are cumulative. Hence, even if one condition is not fulfilled, then the seller cannot avail the benefit of the exemption under Section 54. 

You will get the benefit of section 54.

Hi

Your capital gains would be around 7.46 lacs.

Yes, you need to pay capital gain tax @20.8% is the amount is utilized to repay the existing loan.

TDS deducted by buyer would be 1% and not 10%.

You can claim credit of this TDS while filing ITR. You need to file ITR 2 provided you do not have business income.

In this case when you have purchased a new residential house property in March 20, you can claim capital gain exemption; conditions being:

1. The construction should get completed before March 2023.

2. You need to pay at least 5.5 lacs to the builder before filing your ITR for FY 19-20.

I assume that the property which is sold in March 20 is a residential house property and not just a land. Thus, provisions of section 54 shall be applicable.

Also, please note that if the consideration for the new house property is more than 50 lacs, you are required to deduct TDS @ 1% and file Form 26QB.

We may assist you with return filing and other compliance.

Your capital gain would be around 7.5 lakh. Tax would be charged at 20% on above gain.

Repaying loan wont save tax.

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

Thank you.

It must be 1% TDS and same would be reduced from your 20% tax amount while filing your return of Income.

You owned how many houses at the time of sale of this house?

I would suggest you to have a phone consultation.

Hi

Calculation of  long term capital gains is calculated as follows: 

Sale consideration less cost of transfer less indexed cost of acquisition less indexed cost of improvement.

Here amount of capital gains will be around 7.5lacs.

If you are using amount in repayment then your need pay need capital gains tax @20.8%

Hi

Buyer needs to deduct 1% TDS. excess amount you can get credit.

If you have only this capital gains income then you need file ITR 2

Hi

Exemption under section 54 of the Income Tax Act can be claimed in case of long term capital gain arising on sale of residential house property. In order to claim the exemption, you need to re-invested the amount towards purchasing or constructing new residential house property.

Following condition is need to be fulfilled for availing this exemption

•  You should purchase a residential house either 1 year before the date of sale/transfer or 2 years after the date of sale/transfer. In case the seller is constructing a house, the seller has an extended time, ie. the seller will have to construct the residential house within 3 years from the date of sale/transfer. In case of compulsory acquisition, the period of acquisition or construction will be determined from the date of receipt of compensation (whether original or additional compensation)
• The new residential house should be in India. 

Hello,

LTCG of Rs. 7.46 Lakhs would be chargeable to income tax @ 20% plus cess.

I hope this answer satisfies your requirements.

Regards,

CA Hunny Badlani

You will get the credit of the TDS deducted against your income tax liability while the income tax return for the year. Any credit left would be refunded to you.

For the preparation and filing of the income tax return, it would be advisable to consult a practicing CA.

The flat purchased on 8th March would be eligible for exemption u/s. 54.