Date for calculation of STCG / LTCG
We have a query regarding capital gain tax on sale of a residential flat.
We booked a flat in Dombivali on 6th March’10 and our contribution of 20% was paid to developer in next 45 days.
Flat was registered in our name on 4th September’10 after paying registration charges & stamp duty at Registrar’s office.
Balance payment was made by way of housing loan in construction linked instalments from March’11 to March’14. We received possession of our flat on 9th March’14.
If we sell our flat now then in that case there will be 2 scenarios:
1. if date of registration is considered then it would be LTCG
2. if date of possession is considered then it would STCG
Kindly clarify the applicable gain (LTCG or STCG??) in our case based on details mentioned above.
3. Also, please guide us on exemptions available in case of LTCG.
Thanks & best regards,
Asked 2 years ago in Capital Gains Tax from Thane, Maharashtra
What was the value when the flat was registered in your name in Sept 2010? Was it only for cost of undivided share of land and the cost of construction till that date or the entire value of the flat?
In any case, you acquired ownership of the flat as and when the flat was registered in your name in Sept 2010 and not when it was handed over to you for possession. It will be LTCG only but the determination of cost of acquisition is dependent upon the recitals in the sale deed and construction agreement.
You can avail exemption u/s 54, by investing the capital gains in acquiring another house. You can also avail exemption u/s 54F, by investing the entire sale proceeds in acquiring another residential house. Alternatively you can deposit the sale proceeds in Capital Gains Bonds upto Rs. 50 L to avail exemption.
As per our view the date of registration can be taken as date for capital gains purpose. Then it will be treated as Long Term Capital gains.
The long term capital gains arrived shall be invested in another residential property within 2 years from the date of transfer to get exemption. Till that time the amount shall be invested in Capital Gains Account scheme.
Dear Mr. Shailendra,
In your case the relevant date for determining capital gain shall be date of registration and not date of possession if you have registered it for full value. and hence same shall be treated as long term capital gain.
In case of ltcg you can avail benefit of indexation and on selling if you invest the same in NHAI / REC Bonds or in other residential property than you can claim benefit of deduction of the total amount of investment made.
This is a very critical point in Capital Gains. As many Income Tax Officers think from a revenue point of view and they consider the date of possession as the date of acquisition. But there are a number of judgements which shows that the Date of Booking would be the date of acquisition. So even you can go ahead with it, but just keep the point of a litigation arising because of it.
2. Considering it to be a LTCG you can either invest it in LTCG saving bonds before the due date of filing of returns upto ?50 lacs or you may open up a Tax saving account and deposit the money in the same account before the date of filing of returns. This amount deposited needs to be used for purchase of a house property before the end of 2 years from the date of sale.
Feel free to get back for any further clarifications.
CA ROHIT R SHARMA