I have a question regarding capital gains tax. I apologise beforehand for the question being long drawn and in parts
1) My relative purchased a land for 10 lakhs in 2008 and sold the same for 1 crore in 2017. After indexing , the cost is say 30 lakhs and net capital gain is 70 lakhs
2) She put 35 lakhs in a capital gains account and paid the capital gains tax on the remaining 35 lakhs. Now she has purchased a property worth 30 lakhs with the amount in her capital gains account.
My questions are as follows:
a) While calculating capital gains tax , is the 35 lakhs that she deposited in capital gains account fully exempted ? for example in this case the tax should be 20% of ( 1 crore- 30 lakhs- 35 lakhs) = 20% of 35 lakhs. Am i correct ? Asking this question since , some CA told me that I cant show the full 35 lakhs in capital gains account as exemption ; only a percentage (85% ) of that 35 lakhs in the Capital Gains Account in exempted from Tax.
b) Her regular income is 20 lakhs. With the capital gains income of the remaining 35 lakhs this time , the income exceeds 50 lakhs. Is surcharge applicable ? Asking this question to confirm . According to the instructions in the return / intimation by IT , she shouldn't have to pay the surcharge, Am not sure regarding this.
c) What happens to the amount that is unutilised in the capital gains account ? ( 5 lakhs in this case). Can the amount be parked in the capital gains account for 3 years and later used for improving the new property ? Or do we have to pay 20% tax on the unused amount and get the remainder money back.
Thanks in advance
CAclubindia
