RELEVANT DATE FOR LONG TERM CAPITAL GAIN
This query is : Resolved
04 February 2024
We Bought a residential plot for which we made a booking on *Jan 2021* along with an advance of 10% payment.
We got allotment letter on May 2021 clearly indicating plot number and everything in detail.
We got registered sale agreement in August 2021 for the property.
Later we kept on making payments as per schedule and got registry done in OCT 2023.
We got possession letter on OCT 2023.
Now in March 2024 we want to sell that plot which is a part of plotted development, as it is without construction will it qualify as STCG on sale or LTCG.
Please give your opinion.
We got allotment letter on May 2021 clearly indicating plot number and everything in detail.
We got registered sale agreement in August 2021 for the property.
Later we kept on making payments as per schedule and got registry done in OCT 2023.
We got possession letter on OCT 2023.
Now in March 2024 we want to sell that plot which is a part of plotted development, as it is without construction will it qualify as STCG on sale or LTCG.
Please give your opinion.
10 July 2024
Based on the information provided, here’s an analysis of whether the sale of your residential plot would qualify as Short Term Capital Gain (STCG) or Long Term Capital Gain (LTCG):
1. **Date of Acquisition**: The date of acquisition for tax purposes is generally considered as the date of registration of the sale agreement. In your case, the sale agreement was registered in August 2021.
2. **Date of Sale**: If you sell the plot in March 2024, the date of sale would be March 2024.
3. **Holding Period**: To determine whether the gain is STCG or LTCG, we need to look at the holding period:
- **STCG**: If the property is held for less than 24 months (2 years) from the date of acquisition (registration of sale agreement in August 2021), the gain would be treated as Short Term Capital Gain (STCG). STCG is taxed at applicable slab rates as per income tax rules.
- **LTCG**: If the property is held for 24 months or more from the date of acquisition, the gain would be treated as Long Term Capital Gain (LTCG). LTCG on sale of a residential plot is currently taxed at 20% with indexation benefits available.
4. **Indexation Benefit**: For LTCG, indexation benefit allows you to adjust the purchase price based on inflation. This reduces the taxable LTCG amount and hence lowers the tax liability.
Given the timeline provided:
- Date of acquisition (sale agreement registration): August 2021
- Date of sale: March 2024
Since the holding period exceeds 24 months (more than 2 years), the gain on the sale of your residential plot would generally qualify as Long Term Capital Gain (LTCG). Therefore, you would be eligible to apply indexation benefits to reduce your taxable LTCG amount.
**Important Note**: Taxation rules can vary based on individual circumstances and tax laws may change over time. It's advisable to consult with a qualified tax advisor or chartered accountant who can provide personalized advice based on your specific situation and prevailing tax regulations. They can also assist in calculating the exact amount of LTCG and guide you through the tax filing process.
1. **Date of Acquisition**: The date of acquisition for tax purposes is generally considered as the date of registration of the sale agreement. In your case, the sale agreement was registered in August 2021.
2. **Date of Sale**: If you sell the plot in March 2024, the date of sale would be March 2024.
3. **Holding Period**: To determine whether the gain is STCG or LTCG, we need to look at the holding period:
- **STCG**: If the property is held for less than 24 months (2 years) from the date of acquisition (registration of sale agreement in August 2021), the gain would be treated as Short Term Capital Gain (STCG). STCG is taxed at applicable slab rates as per income tax rules.
- **LTCG**: If the property is held for 24 months or more from the date of acquisition, the gain would be treated as Long Term Capital Gain (LTCG). LTCG on sale of a residential plot is currently taxed at 20% with indexation benefits available.
4. **Indexation Benefit**: For LTCG, indexation benefit allows you to adjust the purchase price based on inflation. This reduces the taxable LTCG amount and hence lowers the tax liability.
Given the timeline provided:
- Date of acquisition (sale agreement registration): August 2021
- Date of sale: March 2024
Since the holding period exceeds 24 months (more than 2 years), the gain on the sale of your residential plot would generally qualify as Long Term Capital Gain (LTCG). Therefore, you would be eligible to apply indexation benefits to reduce your taxable LTCG amount.
**Important Note**: Taxation rules can vary based on individual circumstances and tax laws may change over time. It's advisable to consult with a qualified tax advisor or chartered accountant who can provide personalized advice based on your specific situation and prevailing tax regulations. They can also assist in calculating the exact amount of LTCG and guide you through the tax filing process.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- CLOSING STOCK QUERY
- Gst on travel by air for business purposes
- GST ISD Query on various AMCs
- Taxation on Old jewellery sold
- Missed TDS
- Loss of interest in PF transfer from EPFO to Trust
- Sale of Mutual Funds In Diffirent Financial Years
- Query regarding reporting of exempt foreign remuneration in ITR
- Applicability of Books of Account for Commission Income (Sections 194D & 194H)
- TDS on rent received on hardship compensation being rent on redevelopment of building
- Gst reverse charge mechanism to be claimed in the month of payment
- Itr processing refund
- U/S 194 T
- TDS refund Indemnity Bond
- ITC BENEFIT ON BROKRAGE PAID
- PF wage ceiling
- Concept of Vendor and customner reconciliation
- Mistake in e-invoice identified after 24 hours
- EXPORT PAYMENT
- NRI ITR2 account in 2025-26.
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
