Question on capital gains tax

Hi.I have a residential house which I intend to sell.I will have long term capital gain.I am selling this house for 1 crore & buying two flats for 80 lakhs(45+35) from the same promoter .  I am getting a lumpsome  rs 20 lakhs in exchange. Now please tell whether my taxable income is 20 lakhs or 55 lakhs ?  I have another longterm plot of land which I am selling for 16 lakhs . Now can I show  that I have used this 16 lakhs to buy the other flat to get complete capital gain  tax  relief?
Asked 1 year ago in Capital Gains Tax from Kolkata, West Bengal
As per Income Tax, to avail exemption U/s. 54 you need to invest whole of capital gains only in one house. You cannot invest the same in more than one residential unit. It is immaterial whether it is from same promoter.

Your taxable income depends on the cost of indexation which will be arrived if we can have the date of purchase and cost of purchase.

In the second case the gain will be exempted if you invest in another residential house.

Condition for exemption is that at the time of investment of capital gain you should not have more than one residential house apart from the one you are purchasing i.e at any point of time you can have 2 flats.



Shyam Sunder Modani
CA, Hyderabad
955 Answers
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When you are selling the residential house for Rs. 1 Cr, the long term capital gain (LTCG) will be the selling price less the cost of acquisition. We need to know the cost of acquisition and the date of acquisition for computing the LTCG. 

The exemption of LTCG u/s 54 is available if you are acquiring a residential house, which appears to be available in your case.  

The exact amount of LTCG and the exemption will depend upon the cost and year of acquisition.

In the case of sale of plot of land, you can claim exemption u/s 54F, only if you are investing entire sale proceeds in the acquisition of a new residential house, subject to fulfillment of conditions specified therein. One important condition is that you cannot have another residential house. So you may not get exemption u/s 54F. Exemption u/s 54 will not be available to you, as the property sold is not a residential house but only a plot. In this case, I suggest that you can claim u/s 54EC by investing entire amount in Capital Gain bonds, which has a lock in period of 3 years, after which the money can be used by you in whatever manner you like. 

B Vijaya Kumar
CA, Hyderabad
290 Answers
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Taxable income from residential house shall be difference of purchase price of new flats and sale price of residential  house. plus any income of lumpsum received.

You can alternatively also reduced the capital gain amount by investing income received from plot. 
Vishrut Rajesh Shah
CA, Ahmedabad
194 Answers
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