Long term capital gain computation

Tax planning 530 views 3 replies
User Avatar

Manager
24 Points Joined December 2012

Hello

I have a peculiar situation and want to know how LTCG will be computed in this case and how i can do tax planning

I bought a land in 2005 for 4 Lakh. with indexation its current price would be 10 Lakh. The guideline value as per the office of registrar is 40 lakh. Due to personal reasons I need to sell it urgently and I have a buyer at 30 lakhs only

I read somewhere that IT dept in such case uses guideline value as the min price to calculate sale proceed. So if I sell the property at 30 lakh (which is less than the present guideline value of 40 lakh). How would the capital gain be calculated for income tax. Will it be 30 - 10 lakhs or 40-10 lakhs ?

If the gain would be considered as 30 lakhs (based on guideline) then what options I have to avoid LTCG tax (my true gain is only 20 lakh ? Will I have to pay LTCG on this 10 lakh that i never received ? Can I use 10 lakh of my savings money to buy a residential house worth 40 lakh or put the same in REC bonds for 3 year to avoind LTCG on this amount

So please suggest how this situation will be handled from IT perspective and best way to avoid any LTCG

 

Regards

 

 

 

 

0 Reply Share Follow
On 06 December 2012 at 11:39 Report
Replies (3)
User Avatar

Team Lead
7558 Points Joined November 2011

Tax will be calculated as per the value adopted for stamp valuation u/s 50C.  so you will have to pay LTCG tax by considering teh stamp value.

However you can save tax either by investing in property u/s 54F or investing the same in REC bonds within 6 months from the date of sale.

Reply
On 06 December 2012 at 11:44
User Avatar

CA in Practice
8307 Points Joined August 2012

For the Purpose of valuation of capital gain Stamp valuation amount is consider irrespective of Actual amount received or whatever.

You can claim exemption of CG under section 54F if you are purchasing New residential house property.

Do remember Exemption will consider when you have only ONE residential house. More than ONE house you can't claim Exemption U/S 54F.

 

Reply
On 06 December 2012 at 12:55
User Avatar

-
1257 Points Joined February 2012

If you are showing the sale price as lower than the stamp duty value, you would be required to make a representation to the Income Tax Officer for the same.

 

And if the Income Tax Officer is satisfied that the sale value is lower than stamp duty value, he may approve the sale price as disclosed or he will reject your sale value and compute taxes as per the stamp duty value

Reply
On 06 December 2012 at 13:21


CCI Pro

Leave a Reply

Post Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Recent Threads

More recent discussions | Post

Related Threads
Loading