How to utelise long term capitol gain to save 100% tax

Tax queries 754 views 3 replies

RAJESH KUMAR GUPTA

bmm

34 Points Posted on 24 March 2014

Dear Sir/Madam,

Following is the case :

I had bought two flats of Rs.572000/- each in july 2003.

Flat A : sold & registry done in Aug 2013 but due to delay in home loan procedure by buyer I had received money in my account in Oct 2013. Selling Cost 4050000/- lacs.

Flat B registry doneon 1st Feb 2014 & received 5lacs advance in Jan 2014. Still awaiting balance 20lacs from buyer which is expected either in end of mar 2014 or in early Apr 2014.

Q1 : What is the total capital gain on sell of two flat A & B.

Q-2 : Till what date I have to invest capital gain money received by sell of both flat w.r.t flat A & B as date of sale is different .

Q-3 :What are suggestions on investments of capital gains so that I don’t have to pay any tax?

Q.4: is it necessary to invest long term gain before 31st March 2014 ?

I came to know following facts about investment of capital gains

a- To prevent paying tax, investment should be done in buying in agricultural lands & should be hold for minimum 3yrs. Hence full fund received by selling agricultural land after 3yrs will be fully free from tax & it can be used in buying either residential or commercial properties or residential or agricultural land. Please advise on it.

b- If I invest in flats in soft launch projects then possession should be within 3 yrs & if possession got delayed then I have to pay 20% tax on amount invested in flat ( on capitol gain amount ). How much is it true ?

Apart from above kindly advise on other best possible ways to invest capital gain.

Regards.

RKG

Replies (3)

Mihir

Wealth Manager

5293 Points Posted on 25 March 2014

Property A

Sale consideration = Rs. 40,50,000/-

Less indexed cost of acquisition = Rs. 11,57,560/- (572000x939/464)

Long term capital gain = Rs. 28,92,440/-

Property B

Sale consideration = Rs. 25,00,000/-

Less indexed cost of acquisition = Rs. 11,57,560/- (572000x939/464)

Long term capital gain = Rs. 13,42,440/-

You are required to invest Rs. 42,34,880/- to save tax. You will have to show the details of these transaction in your ITR before due date 31st July 2014. You may claim exemption u/s 54 by purchasing another property or u/s 54EC by investing in bonds.

RAJESH KUMAR GUPTA

bmm

34 Points Posted on 25 March 2014

Originally posted by : RAJESH KUMAR GUPTA

Dear Sir/Madam,

I have sold my flat & registery done on 1st Feb 2014. The total value of property was 25lacs. They gave me 5lacs & on basis of that registry done. But due to delay in home loan process of purchaser, i have not received balance 20lacs which bank was suppose to provide us.

You are requested to confirm following :

1- Since i have not received the full amount, is it necessary to put full long term gain amount in capitol gain account before 31st july 2014.

2- Can i keep long term capitol gain amount in normal saving account till not invested in other property.

Regards.

RKG

Mihir

Wealth Manager

5293 Points Posted on 26 March 2014

You may either invest in another property within 2 years of sale, invest in bonds within 6 months of sale, but you are required to show the details of this sale in your ITR. Last date for filing ITR is 31st July. If you want to purchase another property after 1.5 years, then you are required to deposit in capital gain account scheme, so that the long term capital gain does not become taxable. If you deposit in saving bank account, then you will have to purchase another property or invest in bonds before 31st July.