Obligation towards income tax filing on 1 BHK flat sell

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V R Kanetkar (Querist)
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22 November 2010 This query is submitted by me for 4th time. I request an expert to help me asap.

Respected expert,

My wife , 56, worked with SBI for 29 yrs and took VRS in 2007. We (myself, wife, and our only son) stay at Andheri(w) in a 1 BHK flat which is in my name. We also have a flat in Kandivali(w) in my son’s name and wife’s name (where wife’s name is second as a joint owner).

There is a 1 BHK flat in Baroda in my wife’s name (which was purchased in 1998 and where I stayed between 1998 and 2005 due to my job in Baroda). The purchase amount in 1998 was approximately 3L. The flat is in a society / apartment , which was constructed in either later 80’s or early 90’s. My wife now wants to sell this flat and expected amount is approximately 10 L.

I would like to know the following now.
Once she sells this Baroda flat what is her obligation as far as Income tax / property gains / immediate investment etc. is concerned.

Both me and my son would like to see that she benefits to the maximum since it is her flat and hence her money.

Thanks with warm regards.

Dr. V. R. Kanetkar

CA Anisha Ray

CA Anisha Ray (Expert)
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23 November 2010 Once the Flat is sold, you will have to compute the Capital gains arising out of the transaction.

For computing this capital gain she will be getting the benefit of indexation for these years. The capital gains arising from this will be a long term capital gain.

She could invest this amount in a new House Property within 2 years for getting the capital gains exempt from tax. this new property should be held for at least 3 years after purchasing.or

The capital gains could be invested in Bonds issued by National Highways Authority or RECL within 6 months, also to be held for 3 years after purchase.

The return of Income will have to be filed where this investment has to be declared and you can get the entire capital gains as tax free, provided it is invested within the time limits specified.

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V R Kanetkar

V R Kanetkar (Querist)
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28 November 2010 Dear CA Expert Anisha Ray ,

Thank u so much for your kind, appropriate, and precise reply. I am fully satisfied and we will be follow your advice.
Thanks once again.
Best and warm regards.
Dr. V. R. Kanetkar

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