LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

long term capital gain query

C.A. ANKIT SINGHAL (CA PRACTICE) (52 Points)

13 September 2009

please tell me about tax computation on long term capital gain on property, if assesee invest amount in 80c, and his other income is 150000, and 80c investment is 100000/- and long term capital gain is 50000/-. please tell me the formula of above tax calculation?

Reply
Follow
Share

8 Replies

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 13 September 2009

if normal income of an assessee i.e. other than capital gain (both short term and long term), casual income (income from owing and maintaining race horses, gambling etc.) is more than exemption limit, then the amount of capital gain would attract tax on it. And also Deduction u/s 80C-80U will not be allowed from income other than normal income.

In this case, as normal income is rs. 150000 (assuming an individual assessee, man), deduction would be allowed equal to rs. 100000.

So, tax liability would be nil, as he would be allowed to charge deficieny i.e. rs. 100000 (Rs. 150000 being exemption limit - Rs. 50000 being amt. remained after claiming deduction) from Long Term Capital Gain i.e. Rs. 50000. So, after charging deficiency there would not be any income remains in his favour.

Ashish M (Chartered Accountant) (2731 Points)
Replied 14 September 2009

In the case above, computatoin will be like this.......(assuming resident individual)

OTHER INCOMES : 150000

LTCG : 50000

GROSS TOTAL INCOME : 2,00,000

LESS: Deductin u/s 80C 1,00,000

TOTAL INCOME : 1,00,000

TAX ON TOTAL INCOME:

NORMAL RATES: 50000 = NIL

SPECIAL RATES: 50000 = 20%

[THE BENIFIT OF CHAPTER VI-A DEDUCTION SHALL NOT BE GIVEN FROM LTCG [Sec.112(2)]. IT SHALL BE CHARGED NORMALLY. DEDUCTION SHALL BE FROM NORMAL INCOME i.e. 1,50,000/-. LTCG SHALL BE CHARGED AT SPECIAL RATES.]

Dharmesh k. Dubey (Student) (188 Points)
Replied 14 September 2009

HI,

I assume that it's for a.y.09-10 ,

gross total income(excl ltcg) 150000.

Less : 80c 100000( no deductions from ltcg are allowed)

net income (excl ltcg) 50000

add : ltcg 50000

net taxable income 100000

tax on income other than ltcg (i.e 50000) Nil

as per sec 112, taxable ltcg ( ltcg (50000)- unexhausted exemption(150000-50000)) NIL

Tax liabilty Nil

Ashish M (Chartered Accountant) (2731 Points)
Replied 14 September 2009

APOLOGY FOR THE ABOVE WRONG SOLUTION OF MINE...........

FROM THE NORMAL INCOME, FIRST DEDUCTIONS U/S 80C - 80U IS TO BE DEDUCTED AND THEN SUCH DIFFERECE UPTO NON-TAXABILITY LIMIT SHALL BE COMPENSATED BY CAP. GAINS AND THE BAL. OF CAP GAINS SHALL BE TAXABLE AT ITS SPECIAL RATES........

SOLUTIONS DONE DHARMESH AND LOVE IS RIGHT............\

SORY..........!!!!!!!!!!!!!!!!!!!!!

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 14 September 2009

NO tax liability in this case.

VARUN (PCC STUDENT) (523 Points)
Replied 15 September 2009

No tax liability in this case .. as the deficiency of normal income will be set off by LTCG and after that there is no income, so no tax will be there ..

Regards

Varun Makhija