Question on capital gain..... plz give immediate reply

Tax queries 343 views 5 replies

Hi Frnds/Experts,

Please provide me your immediate reply to the following tax queries:

(a) My mother aged 55 years has a vacant land that was bought in 2010 for 70,000. Today it was sold for 3,15,000. What was her taxable income? What is the available tax planning for the above to reduce the tax?

(b) My father (Aged 60+) purchased a vacant land in 2013 for Rs.14.30 Lacs (Rs.6,500 per Sq.Ft X 220 Sq.Ft). Today, he is willing to exchange the land for another land Rs.26 Lacs (Rs.15,000 X 175 Sq.Ft). The balance amount will be paid in through loan. The registrations of these lands for both parties will be due after April. Please explain:

       1. Will there be capital gain tax? If yes, how much.

       2. Which assessment year, the capital gain income (if any) will be taxable.

       3. Whether the interest and principal on loan can be claimed as deduction.

      4. What is the available tax planning for the above to reduce the tax.

Based on your advice, i would suggest them.

Thanks in advance.

 

 

Replies (5)
(a) Capital gains to be calculated for assessee : Mother. Full value of consideration( stamp duty value or actual sales consideration whichever higher ) : ( assuming ) Rs.315000 Less : Indexed Cost of Acquisition 70000×1081/632 = Rs.119731. Long term capital gains = Rs.195269. Tax saving options : 1.Invest the gains in RECL or NHAI bonds in 6 months from transfer( Sec 54 EC ) 2. Invest in residential property ( Sec 54F ) Assumptions : Stamp duty value is lower than Rs.315000. Land was acquired in F.Y 2009-10. If it was acquired in F.Y 2010-11 then replace 632 by 711.
Mother assesee : Tax @ 20% shall be levied on the gains. However if mother has no other income apart this i.e if income of mother does not exceed Rs.250000 in all , then no liability of any tax.
Mother assessee : Assessment year shall be 2016-17.

Hi Raj C Doshi............ Thanks for your valuable reply... can u please reply for Father also?

Father Assessee : Transaction will be taxed in the year of transfer of possession. Full value of consideration : Stamp duty value or agreement value of new plot whichever higher. 26 lacs Less : Cost of Acquisition 14.30 lacs. Short term Capital gains 11.70 lacs. Taxed at slab rates with basic exemption limit of 3 lacs. Tax amount to Rs.171000.No deduction of principal or interest is available since loan is not fpr thr purpose of housing.Assumptions : exchange is effected in F.y 2015 -2016. Land is exchanged within 3 years from the date of purchase. Advise : Transfer land after 3 years so that it is long term asset. And you can benefit for inflation and lower tax rates ( similar computation as that of your mother taking respective cost inflation index ). Warm Regards Raj C Doshi


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