Flat amount returned by builder after 6 years
This query is : Resolved
21 March 2012
Purchased flet in Oct 2006 for 32 lakhs.
by March 2010 paid 27 lakhs but flat not complete. In feb 2012 , builder gave 30 lakhs after taking NOC.
flat amount was paid jointly with my wife.
IT on the differential amount
Sunil Kumar
by March 2010 paid 27 lakhs but flat not complete. In feb 2012 , builder gave 30 lakhs after taking NOC.
flat amount was paid jointly with my wife.
IT on the differential amount
Sunil Kumar
22 March 2012
Difference amount should be treated as income from other sources.
22 March 2012
Thanks Mr Vinod.
The other income of Rs 3 lakhs will be divided between me and my wife in prortion to the amount paid by us?
Sunil Kumar
The other income of Rs 3 lakhs will be divided between me and my wife in prortion to the amount paid by us?
Sunil Kumar
25 July 2024
Based on the details provided, here’s how the income tax (IT) implications could be considered:
1. **Capital Gains Calculation:**
- You purchased the flat in October 2006 for 32 lakhs.
- By March 2010, you had paid 27 lakhs, but the flat was not complete.
- In February 2012, the builder gave you 30 lakhs after taking NOC (No Objection Certificate).
To calculate the capital gains:
- **Cost of Acquisition:** This includes the purchase price (32 lakhs) plus any additional expenses directly related to the acquisition (such as stamp duty, registration charges, etc.).
- **Cost of Improvement:** If any substantial improvements were made to the flat after purchase.
- **Indexed Cost of Acquisition and Improvement:** Adjusted for inflation using the Cost Inflation Index (CII) to reflect the current market value in 2012.
2. **Tax on Capital Gains:**
- Calculate the capital gains as the difference between the sale proceeds (30 lakhs) and the indexed cost of acquisition/improvement.
- Long-term capital gains tax will apply since the holding period exceeds 3 years. As per the current tax laws, long-term capital gains on immovable property are taxed at 20% after indexation.
3. **Division of Other Income (Rs 3 lakhs):**
- The other income of Rs 3 lakhs should ideally be divided between you and your wife in proportion to the amount each of you contributed towards the payments related to the flat.
- Since the flat amount was paid jointly with your wife, you would divide the other income accordingly.
4. **Income Tax Filing:**
- You will need to declare both the capital gains from the sale of the flat and the other income in your income tax return.
- The capital gains will be subject to tax at the applicable rate after indexation.
- Ensure to maintain records of all payments made towards the flat to accurately compute the capital gains and the division of other income.
5. **Taxation and Documentation:**
- It’s advisable to consult with a tax advisor or chartered accountant who can assist in calculating the exact capital gains tax liability and ensure compliance with tax laws.
In summary, the capital gains from the sale of the flat will be taxed based on the indexed cost of acquisition and improvement. The other income (Rs 3 lakhs) will be divided between you and your wife in proportion to your respective contributions towards the payments for the flat. Each of you will then be responsible for declaring and paying taxes on your share of the other income.
1. **Capital Gains Calculation:**
- You purchased the flat in October 2006 for 32 lakhs.
- By March 2010, you had paid 27 lakhs, but the flat was not complete.
- In February 2012, the builder gave you 30 lakhs after taking NOC (No Objection Certificate).
To calculate the capital gains:
- **Cost of Acquisition:** This includes the purchase price (32 lakhs) plus any additional expenses directly related to the acquisition (such as stamp duty, registration charges, etc.).
- **Cost of Improvement:** If any substantial improvements were made to the flat after purchase.
- **Indexed Cost of Acquisition and Improvement:** Adjusted for inflation using the Cost Inflation Index (CII) to reflect the current market value in 2012.
2. **Tax on Capital Gains:**
- Calculate the capital gains as the difference between the sale proceeds (30 lakhs) and the indexed cost of acquisition/improvement.
- Long-term capital gains tax will apply since the holding period exceeds 3 years. As per the current tax laws, long-term capital gains on immovable property are taxed at 20% after indexation.
3. **Division of Other Income (Rs 3 lakhs):**
- The other income of Rs 3 lakhs should ideally be divided between you and your wife in proportion to the amount each of you contributed towards the payments related to the flat.
- Since the flat amount was paid jointly with your wife, you would divide the other income accordingly.
4. **Income Tax Filing:**
- You will need to declare both the capital gains from the sale of the flat and the other income in your income tax return.
- The capital gains will be subject to tax at the applicable rate after indexation.
- Ensure to maintain records of all payments made towards the flat to accurately compute the capital gains and the division of other income.
5. **Taxation and Documentation:**
- It’s advisable to consult with a tax advisor or chartered accountant who can assist in calculating the exact capital gains tax liability and ensure compliance with tax laws.
In summary, the capital gains from the sale of the flat will be taxed based on the indexed cost of acquisition and improvement. The other income (Rs 3 lakhs) will be divided between you and your wife in proportion to your respective contributions towards the payments for the flat. Each of you will then be responsible for declaring and paying taxes on your share of the other income.
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