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

Short Term Capital gain

Dr Pankaj Garg (Consultant) (25 Points)

19 September 2010

I have two queries, shall be grateful if somebody guides me

1. To escape short term capital gain in property selling, can I sell property cheaper than then the market price( or collector rate)?

2. What are the ways to minimize the tax payable under Short Term Capital on property selling?

Thanks

Reply
Follow
Share

4 Replies

madhur gupta (student/article ) (1022 Points)
Replied 19 September 2010

since you are regular dealing in sale of houses.You must show it as your stock and show it as you business

and you can claim expenditures like advetisement,conveyance etc

in this way you can reduce your taxable income.

rest plz confirm also.....

other suggestions are most invited.

1 Like

Ashish Ojha (Chartered Accountant) (469 Points)
Replied 20 September 2010

Selling at cheaper rate will not be useful. Section 50C will be attracted and the Value assessed by the municipal authority/ Stamp valuation authority will be taken as Full value of Consideration...

So you will end up paying tax at that higher amount amount itself..

Above planning Suggested by Mr. Gupta is also a good idea but i think it should be used in a different way... If You are Showing Property as stock in trade and then paying tax on difference, you will still pay tax @ 30%.. But still You can claim some expeses like Advertisement..

But my Advise is to Set off loss of some other business with it, Because Conveyence Amount cannot be shown unreasonably high..

Other suggestions are also welcomed..

All the best

1 Like

Dr Pankaj Garg (Consultant) (25 Points)
Replied 20 September 2010

Thanks Mr Ojha and Mr Gupta for taking out time and providing me with the useful suggestions. I appreciate it a lot.

Another point- Can I show expenses on the house(The item under consideration is a 1 Kanal house with one room set, bathroom , kitchen constructed) like building a good construction wall, filling the deep pitholes in the compound of the plot , completely breaking the one room set and making it afresh etc. Along with this, losses in business and other expenditures in the property business could be added.

Secondly in purchasing this house 2 yrs back, I had availed of 10L long term capital gain, which shall now become short term capital gain as well. Showing the above discussed expenses, will they be applicable on the previous availed capital gain as well? Kindly guide

Santosh (Student ( Final Year - New )) (348 Points)
Replied 20 September 2010

Originally posted by : Ashish Ojha
	Selling at cheaper rate will not be useful. Section 50C will be attracted and the Value assessed by the municipal authority/ Stamp valuation authority will be taken as Full value of Consideration... So you will end up paying tax at that higher amount amount itself.. Above planning Suggested by Mr. Gupta is also a good idea but i think it should be used in a different way... If You are Showing Property as stock in trade and then paying tax on difference, you will still pay tax @ 30%.. But still You can claim some expeses like Advertisement.. But my Advise is to Set off loss of some other business with it, Because Conveyence Amount cannot be shown unreasonably high.. Other suggestions are also welcomed.. All the best