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Property short term capital gains tax

Sandeep (Consultant) (26 Points)

06 March 2013

Hi,

Are you able to kindly respond to following queries? Thanks in advance for your time on this.

1. Can interest paid on bank loan be used as a deduction for STCG tax?

2. I live overseas and I took some personal loan from an overseas bank, which was then used to make initial deposit of 20% towards purchase of flat in Mumbai. Can I claim deduction on the interest paid for STCG tax?

3. I have incurred some losses from equities which I purchased in the same financial year as the sale of property. Can I deduct these losses against the STCG tax?

4. Can losses incurred in a different financial year be deducted against STCG tax? Both (loss and gain) relate to different financial years.

5. Can STCG Tax be paid in instalments? When are these instalments due for 2013 and what is the percentage? Is there any interest or other charges applicable if choosing to pay in instalments?

Thank you very much!

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5 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 06 March 2013

As you said you had taken a personal loan and not a home loan for purchase of property so I dont think that the interst paid to bank till the date of sale of property would get added to teh Cost of acquisition of the property. However there might be some court rulings.

Yes you can claim set-off short term loss on equitites against the short term gain on property. If the short capital loss for a A.Y. does not gets completely set-off against the short term gain for that F.Y. then the loss can be c/f to teh next A.Y. and can be claimed against the short term capital gain of the subsequent F.Y. only upto 8 A.Y. sbusequent to A.Y. in whihc the loss i determined.

You can pay the entire STCG tax b y way of self-asst time a the time of filing your return. No need to pay the tax in installemnts.

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Sandeep (Consultant) (26 Points)
Replied 06 March 2013

Hi Giridhar

Thanks for your response. Just to clarify:

1. I took out equity from the value of my property in Australia (i.e value of my property was more than bank loan, and I used that GAP money towards deposit of purchase of flat in India). Withdrawing this GAP (or Equity from my Australian property) has increased the interest amount that I pay here. Can I use this additional interest amount as an set-off against STCG tax? So in other words its not necessarily a personal loan.

2. If the loss from equities is less than Short term capital gain, but we incur another short term loss in the next year. Can the loss incurred in the following year be adjusted against prior year's STCG ?

3. Can you please clarify your last response "You can pay the entire STCG tax by way of self-asst time at he time of filing your return. No need to pay the tax in installemnts.". Do you mean that I can specify any time period that I want to pay off the STCG tax? E.g. 2-3, or 5 years?

Thank you very much!

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 06 March 2013

yes you can use the interest amt to pay your STCG tax.

yes you can set-off the loss of the previous year against the income of teh subsequent year only upto 8. asst eyars

Suppose now your due date for filing your return of income for F.Y. 2012-13 is 31st july 2013 then you have to file your return on or before 31st july 2013. So after you assess your tax liability for A.Y. 2013-14 you can pay the same on or before the due date of filing the return of income i.e on or beofre 31st jlu,13.

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Sandeep (Consultant) (26 Points)
Replied 06 March 2013

Thanks once again.

1. Regarding point#2 from the last message - What I mean is that once the tax is logged and paid for fy 2012-13, and after that if there is no STCG in fy 2013-14, but there is further Short term equities loss in fy 2013/14. Can the tax logged for fy 2012-13 be adjusted with the losses that incurred in fy 2013-14? i.e STCG fy 2012/13 MINUS (sum total of losses incurred in fy 2012/13 and fy 2013/14)??

2. Regarding point#3 from the last message - Let me be more clear. I don't have money to pay the tax for fy 2012-13, which as you mentioned will be due on or before 31st july 2013. Is there any provision to seek say 3-4 years to pay this tax. I am anticipating my tax liability to be around 4-5 lakhs, and I don't have any regular income in India from salary / others means apart from whenever I sell properties.

Hope this provides more clarity. Thanks

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 06 March 2013

no you cant do that way. C/F STCL can be adjusted only against STCG of that year. It can't be set-off against the STCG taxes paid.

you will have to mandatorily pay tax for that A.Y. only on or before the due date. No time extnesion will be allowed. If you watnt o defer your tax pymt then you would be liable to pay interst u/s 234A for late filing of your return.

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