Capital gain

This query is : Resolved

Dinesh Gupta (Querist)

14 January 2012 Have a Nice day
My client have four son and two residential house before 1981 cost A-42500.00 & B-275800 now sale "A" house Rs.45 lac and invest to residential hosue for son but purchse own name rs.3425800 in 2010 how can I save tax

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

15 January 2012 1. You have to get the value as on 1.4.1981, in respect of the House A.
2. Suppose, it is valued at Rs.100000/- as on 1.4.1981.
3. Indexed cost = Value as on 1.4.1981x 7.85
Or 785000.
4. The House Purchased by assessee should not be earlier then 1 year , from the date when House A is being transferred. for claiming exemption/ partial exemption.

5. Capital Gains =4500000-785000=3715000
6. Taxable Capital Gain = 3715000-3425800
7. Please note that 3425800/ must have been invested within 1 year before sale of House
A. Otherwise the assessee will have to purchase another residential house.

Message likes : 1 times

Prof. Bajaj

Prof. Bajaj (Expert)

15 January 2012 Completely Agree with Bafna Sir.

Also, coming to your query to save tax, you need to invest the balance Rs. 2,89,200 in capital gains bonds like NHAI and REC. This will make the tax liability of your client as zero.

Message likes : 1 times

Dinesh Gupta

Dinesh Gupta (Querist)

15 January 2012 Can I Invest for Commercial building rs 780,000/- (Shop) for save tax from sale of Residencial House. How ? pls exmaple as above

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

15 January 2012 Against comm. property you will not get exemption. Better, you purchase bonds as suggested by Prof. Bajaj.
Please also confirm at your end that the time difference between the 2 transactions does not exceed 1 year.

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