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Capital gains tax calculation

Sanjay Dhaduti (Service) (56 Points)

29 July 2016

Sale of Residential Property Location : Pune City Year of Purchase : 1997 Cost of Purchase : Rs 6 lakhs Sale price as on 01.08.2016 : 60 lakhs Sellers : Joint owners and Senior Citizens Seller Income Tax : Income is nil hence no tax What is Capital Gains Tax incurred if any ? TDS of 1% deducted during sale, as no tax liability from other sources of income and in all probability no tax liability from Capital Gains will refund of TDS be given in full if claimed in returns?

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SHIVANG (Practicing CA) (124 Points)
Replied 29 July 2016

Your Indexed cost of aqusition will be Rs. 22.13 L which will be deducted from sale consideration of Rs. 60 L. The capital gain is 37.86 L. in total which will be devided in the joint owners. As there is no other income, the capital gain will be reduced by the basic exemption limit i.e. 3 lakhs each as all are senior citizens. The balance amount will be taxed @ 20.60%. You can avail the TDS credit.

You can avoid the capital gain by:

1. Invest in new residential property.

2. Purchase the bonds of NHAI or REC.

Assumptions:

1. There is no cost of improvement and no cost of transfer.

2. The joint owers are of the age 60 years or more but less than 80 years.

3. The share of the joint owners in the property is equal.

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Sanjay Dhaduti (Service) (56 Points)
Replied 29 July 2016

Thanks for the reply

Why 20.60% ? Both the joint owners are having PAN CARD Nos.

In this case will the remaining amount will have to be apportioned as per the Income slab structure

For Senior Citizens (Age 60 years or more but less than 80 years)

Income Tax Slab	Income Tax Rate
Income between Rs. 3,00,001 - Rs. 500,000	10% of Income exceeding Rs. 3,00,000
Income between Rs. 500,001 - Rs. 10,00,000	20% of Income exceeding Rs. 5,00,000
Income above Rs. 10,00,000	30% of Income exceeding Rs. 10,00,000

When you say 'you can avail the TDS Credit' Rs 60,000/- will be offset against the tax liability that will arise as per the Tax slab tabulation ?

Sanjay Dhaduti (Service) (56 Points)
Replied 29 July 2016

Purchase the bonds of NHAI or REC to offset LTCG Tax

On Maturity of NHAI or REC during redemption how will the interest earned be treated ? will they deduct TDS? should we submit Form 15G or H?

Udgam Koomar (Tax Technologist) (1949 Points)
Replied 29 July 2016

Why 20.60% ?

LTCG is taxed at a beneficial flat rate of 20%, plus a cess of 3%, subject to fulfilment of certain conditions.

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Sanjay Dhaduti (Service) (56 Points)
Replied 29 July 2016

COST OF HOUSE IMPROVEMENT - We have incurred expenses of Rs.8-9 Lakhs - Can this be claimed even if you dont have bills for the expenses incurred having spent on the maintenance of the house, some modifications like covering the Balcony, enclosing the Balcony etc. for the past 18 years from time to time.?