Long term capital gain tax

This option is not applicable for sale of property. This is only applicable for certain classes of securities.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

yes sir that is correct. The same is applicable since many year.

The Assessee has an option to choose from any one of option which is beneficial to the Assessee i.e.

1. If you are taking indexation benefit then the tax is 20% of the profit after indexation.

2. If you are directly deducting the amount of purchase and offering tax without indexation then tax rate is 10%.

Hi,

Sir, you are referring to an Article published on May 26, 2012.

Capital Gain Tax provisions have been changed a lot after that. The provision to opt for 20% with indexation or 10% without indexation is no more available.

Also, in the Union Budget presented on Feb 1, 2017 it has been proposed to decrease the period of holding for considering long-term capital gains in respect of Immovable properties to 24 months (from existing 36 months) and shift the base year u/s 55 to 2001 (from existing 1981)

I don't know about the authenticity of the article but this option is not applicable for property sale.

You can refer the following article

www.valueresearchonline.com/story/h2_storyview.asp?str=30015&&utm_medium=vro.in

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Hi,

Section 54 is applicable only if the property sold is a property used for residence.

As per Section 54, you will have to deposit the Capital Gain amount (To the extent not utilized for buying or constructing new House) in a Capital Gains Account Scheme within the due date of filing Returns. So, you are free to keep the amount (Exceeding the Capital Gain Amount) in your Bank Account or invest it in any way you wish. Out of the capital gain amount, you can either buy a house or a residential plot and start construction. Any amount not utilized for Purchase or Construction should be deposited in Capital Gain Account Scheme (On or before due date if filing returns i.e 31-Jul-2017 if the old house is sold on or before 31-Mar-2017).

If you do not construct new home within 3 years, then the amount of capital gain not utilized shall be treated as the Capital Gain in the financial year in which the period of 3 years expires.

Yes. You can use the Capital Gain amount to buy a new residential plot and claim Section 54 Deduction

Yes Sir, subject to construction of new house need to be finished in 3 years. if not than you need to pay along with interest for 3 years.

Hello Sir,

In order to avail benefit u/s 54, you need to construct your property within a time frame of 3 years from the date of sale of your property on which tax is to be paid. Till that time you have to deposit your funds under CGAS deposit and can withdraw whenever you need funds for the construction purpose with the permission of the banker.

If any amount remains unused then the amount shall be taxed @ 20%.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Dear Sir,

Yes, the entire construction expenses including cost of land can be claimed u/s 54.

Just make sure you maintain all the documentation part.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Yes, you need to pay LTCG and the purcahse price would be the price at which your father has purchase the house. However, if your father has purchase the house before 01.04.2001 ( and you are selling this after March 2017) , you have to take FMV as on 1.4.2001 as the purchase price.

Please feel free to call/revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Dear Sir,

You need valuation report is you are not available with the purchase price

Yes it can be.

Sir new amendments clarifications is yet to be released. Once it is released then we can answer the same.

Yes. It can be sold.

The new Capital Gain provisions proposed in this budget related to Indexation will come into effect from AY 2018-19 only (That is for properties sold on or after 1st April 2017)

Hello Sir,

You will have to find out the value of the property when it was bought by your father and not when you inherited. In case the property was bought by him before 01-04-1980 then the value as on 01-04-1980 will be required, if it is sold before 31st March 2017.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Under second proviso to Section 48, the cost of acquisition "shall" mean indexed cost of acquisition. I just copied and pasted part of this section for your ready reference:

Quote

48. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :—

(i) expenditure incurred wholly and exclusively in connection with such transfer;

(ii) the cost of acquisition of the asset and the cost of any improvement thereto:

Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so, however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from every reinvestment thereafter in, and sale of, shares in, or debentures of, an Indian company :

Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words "cost of acquisition" and "cost of any improvement", the words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted: "

UNQUOTE

You may also go through the tutorial provided by the IT Dept at the following link:

http://www.incometaxindia.gov.in/tutorials/15-%20ltcg.pdf

The benefit of taxing at a lower rate of 10% was subsequently withdrawn and now it is not available for LTCG on sale of properties. You can sell the property before April 2017 but fair market value as on 1/4/81 or indexation prevailing in the year of acquisition of the property shall be applied. If you sell the property, you can take fair market value as on 1/4/2001. You can check your tax liability under both the scenarios and plan your sale accordingly.