vinothkumar (SE) (25 Points)
11 August 2012Hi All,
I am a government servant and i am about to sell my non agriculture land which is nearby urban(metro city).I have purchased it on 1990's for very less value (less than 1 lakh),now the land value is around 1.5cr.Please suggest how much incoe tax i need to pay?how i need to make it audit? how i can reduce the tax?Many thanks in Advance.
deeksha
(article)
(24 Points)
Replied 12 August 2012
The capital gain on sale of the land will be 1.5 crore less the indexed purchase cost. for ex, if the cost was 1 lakh in 1990, then
Sale consideration 1.5crore
Less: Indexed Cost
( 1lakh*785/182) 431319..
the diff will be taxed at the flat 20% rate.
The tax can be avoided by taking advantage of Sec 54EC or/and 54F of the Act.
As per Sec 54EC, the capital gains can be invested in the specified bonds issued by REC or NHAI within 6 months max upto 50 lakh. Assessee shall not transfer or convert or avail loan on the security of such bond within three years.
As per sec 54F, the assessee can purchase within 1yr prior or 2 yrs aftr the transaction or construct within 3yrs a residential house provided he does not own more than one residential house on the date of transfer. If the cost of the new house is not less than the net consideration then the whole of the capital gain, otherwise that proprtion as the cost bears to the net consideration shall be exempted.
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