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Short term capital gain tax on sale of house property (Income Tax)

This query is : Resolved

Author : Anonymous

( Author )
29 August 2012

A HOUSE WAS SOLD WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF POSSESSION. THE HOUSE WAS PURCHASED WITH A BANK LOAN AND HENCE THE SAME WAS MORTGAGED WITH THE BANK FOR WHICH A CONVEYANCE DEED WAS EXECUTED. BEFORE SALE OF THE HOUSE THE HOUSE WAS DE-MORTGAGED AS THE LOAN AMOUNT WAS REPAID BEFORE SELLING THE HOUSE.

MY QUERY IS :-
WHILE CALCULATING THE SHORT TERM CAPITAL GAIN ARISING FROM SALE OF THE HOUSE, WHETHER THE FOLLOWING AMOUNT CAN BE CONSIDERED AS COST OF ACQUISITION :

1. COST OF PURCHASE
2. COST INCURRED TOWARDS EXECUTING AND REGISTERING CONVEYANCE DEED IN FAVOUR OF BANK AND LEGAL FEES PAID TO ADVOCATE
3. COST INCURRED TOWARDS RE-CONVEYANCE FROM BANK AND LEGAL FEES PAID TO ADVOCATE
4. STAMP DUTY PAID AS PER RULES
5. REGISTRATION CHARGES PAID AS PER RULES
6. OTHER MISC. CHARGES SUCH AS LEGAL FEES PAID TO ADVOCATE FOR PREPARING SALE DEED AND REGISTERING THE SAME, COST OF TYPING THE SALE DEED ETC.

CA. Subhash Dangi

( Expert )
29 August 2012

Bank Loan on property and Sale of property are entirely different transactions. They can not be taken as related while computing the STCG.

Any expenses incurred on sale of property is only deductible as cost of sale.

In your case (1) cost of purchase (4) stamp duty on purchase and (5) registration charges on purchase house will be considered as cost of acquisition

with regard to point no.6 generally the buyer will incur the advocate fees on drafting, preparing sale deed and its registration.
If the seller incurred such expenses, then can be claimed as expenditure on sale.
Remaining expenses are not related to sale but are related to availing and clearing the bank loan and hence not deductible.

Author : Anonymous

( Author )
29 August 2012

Thanks Shri Subhashji. However, my question is while I purchased a flat, it was registered & stamp duty paid for which I had to incur some expenses towards advocate fees,typing of the documents of sale deed etc. These misc. expenses can be included under cost of acquisition of house.

CA. Subhash Dangi

( Expert )
29 August 2012

Yes,U can include these expenses under cost of acquisition

Author : Anonymous

( Author )
29 August 2012

The sale deed of house sold was executed in first week of August-2012. The short term capital gain arising out of this sale is subject to STCG tax. In how many installments this STCG tax is to be paid ( ie. percentage wise ) in each quarter i.e from July to Sept, Oct to Dec & Jan-12 to Mar-13. The challen no. to be used for payment of STCG tax also may be intimated.

CA. Subhash Dangi

( Expert )
29 August 2012

In case of Non-corporate assessee,the due dates are:

On or before 15 September - not less than 30% of tax payable
On or before 15 December - not less than 60% of tax payable
On or before 15 March - not less than 100% of tax payable

Author : Anonymous

( Author )
29 August 2012

Thanks. By which challen no. I have to deposit the STCG tax.

CA. Subhash Dangi

( Expert )
29 August 2012

Challan No. ITNS-280