Short term capital gains tax query

Arvind Sharma (ACA) (1432 Points)
Replied 30 March 2014

Cost will the the same you get register for flat (i.e. Rs. 34 lacs) and sale price will be that at which registry to be made. Cost of registration on purchase, if bear by you will form part of purchase cost and cost of registration, if paid by you, will be transfer expenses. Cost of generator has no relevance to capital as the same has no role w.r.t acquistion of flat and so Rs. 70,000 will not be considered.

If i presume sale registry of Rs. 38 lacs, your capital gain will be Rs. 4 lcas before deductin of any transfer expenses. Second, this gain will be short term capital gain and you has to paid tax according to your slab.

CA Deepesh Ruhela (Keen to Learn) (3271 Points)
Replied 30 March 2014

a) Sale Price will be 35 lac or Stamp duty value (if it exceed the Fair Market Value of Flat).

b) Rs.25 lac will be considered as Cost.

c) Yes, it is a part of cost.

d) Yes, it will become part of cost if it is paid in coonection of purchase of flat.

e) If it is include in sale price then it will be considered. (i ve dobut on this point, please wait for more reply.)

Agree with Arvind sir that Cost of generator has no relevance to capital as the same has no role w.r.t acquistion of flat.

Samba Mitra (A) (25 Points)
Replied 31 March 2014

Hi,

Thanks Arvind and Deepesh for your replies. However, I have got 2 different replies regarding my queries, and am confused to which one is the correct.

a) OK on this point. Sale price will be the value assessed by registrar (= 38 lacs), since it is exceeding my actual sale price (35 lacs).

b) I am confused on what the cost price will be considered when I bought the flat. I bought it for 25 lacs, but the market value assessed by the registrar was 34 lacs, and I had paid stamp duty and registration on the market value only, the total of both amounting to around 2.8 lacs.

c) OK on this point. So total stamp duty + registration amount of 2.8 lacs become my cost.

d) Confused on this point again. I had paid this service tax while buying the flat (as it was under construction). I guess this is the government service tax that has to be paid. I have receipts of these.

e) Confused on this point again. This cost was taken by builder separately (not included in the flat cost). This included legal fees, generator and transformer charges etc. I have the receipt for the same.

So, apart from points a) and c), I am still confused on points b), d) and e). Would someone be kind enough to clarify. I know this will be short term capital gains, and I will have to calculate the tax amount accordingly once the points are cleared.

Many thanks in advance.

Arvind Sharma (ACA) (1432 Points)
Replied 01 April 2014

b) Cost will be Rs. 25 lacs plus registration charges and stamp duty on Rs. 35 lacs.

d) Service tax paid will also included in cost if already not included in Rs. 25 lacs and

e) if you has paid one time cost which inclides legal fees, generator and transfrmer charges, which all are associated with purchase of flat, the same will also form part of Cost of Flat.

Mihir (Wealth Manager) (5293 Points)
Replied 02 April 2014

Market rate of a property is always higher than the stamp value. If there is a cash component in the sale, the sale deed must not go below the stamp value. For example, ABC property's market value is Rs. 25 lacs. It's stamp value is Rs. 18 lacs. One may prepare a sale deed of Rs. 20 lacs in white and Rs. 5 lacs in black. But, the white portion should never go below Rs. 18 lacs.

So, when you say market valuation, what do you really mean? Is it market rate or is it rate as per stamp duty?

jay mehta (no) (25 Points)
Replied 07 August 2015

Individual was holding listed securites for more than 5 years. on his death this shares were transferred automatically to his wife before 10th of july 2015 and wife sold this shares within a period of two months. then gain arising from this transaction will be taxable to the wife as STCG or LTCG. please quote along with section numbers...