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
CAclubindia
