Capital Gains
This query is : Resolved
HARIHARA SUBRAMANIAN.S
(Querist)
26 May 2011
1.Myself and my sister has purchased a property jointly in the year 2005(3.5.2005) for 4 lakhs.
2.Next month we have decided to sell the property for 10 lakhs and it has been agreed that the entire consideration will be settled in favour of me.
3.I am planning to invest in a new house property in my name with the consideration received.
4.Can i avail exemption under section 54?
5.Please clarify the tax implications in the hands of my sister.
6. So far income received from property and related deductions (i.e. interest on loan, 80c etc) have been claimed only by me. will that have any implication.
2.Next month we have decided to sell the property for 10 lakhs and it has been agreed that the entire consideration will be settled in favour of me.
3.I am planning to invest in a new house property in my name with the consideration received.
4.Can i avail exemption under section 54?
5.Please clarify the tax implications in the hands of my sister.
6. So far income received from property and related deductions (i.e. interest on loan, 80c etc) have been claimed only by me. will that have any implication.
Ashok Asthana
(Expert)
27 May 2011
You had purchased a property on 3/2/2005 and sold in March 2005.
As per Sec 54 you should have either
1. invested in new property within 6 months, if not then
2.Investment s to be made inspecified infrastructurebond for a lock in period of 3 years (Interest @ 6%)
Have you followed the above ?
Income received from property: How have you claimed deduction of interest on loan, when the proprty was sold for a much igher value? Please clarify. From the above facts, given by you, it is very clear that you were liable to Capital gains tax in the FY 2005-2006 itself.
As per Sec 54 you should have either
1. invested in new property within 6 months, if not then
2.Investment s to be made inspecified infrastructurebond for a lock in period of 3 years (Interest @ 6%)
Have you followed the above ?
Income received from property: How have you claimed deduction of interest on loan, when the proprty was sold for a much igher value? Please clarify. From the above facts, given by you, it is very clear that you were liable to Capital gains tax in the FY 2005-2006 itself.
HARIHARA SUBRAMANIAN.S
(Querist)
27 May 2011
u have mistaken, property was purchased on 3.5.2005 and to be sold on 6.6.2011.
Ashok Asthana
(Expert)
27 May 2011
Purchase value-400000.00
Inflationary cost index FY 2005-06=497
Present value as on 1/4/2011+
400000X711/497=572233
Sale consideration=1000000-572233=427767
=Capital gains
Capital Gains Tax @ 20% on 4277767 is payable by you.
Alternative-Purchase a property within six months above 427767
or invest the amount in specified infrastructure bonds (Interest 6% p.a)Lock in 3 yrs, Interest taxable in the year of redemption.
Please check all calculations.
Inflationary cost index FY 2005-06=497
Present value as on 1/4/2011+
400000X711/497=572233
Sale consideration=1000000-572233=427767
=Capital gains
Capital Gains Tax @ 20% on 4277767 is payable by you.
Alternative-Purchase a property within six months above 427767
or invest the amount in specified infrastructure bonds (Interest 6% p.a)Lock in 3 yrs, Interest taxable in the year of redemption.
Please check all calculations.
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