Capital Gain

psethi 1
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Please could you give me the LTCG tax payable for the following:

A

Amt.Realised from Sale of Res.Property: Rs.500.00 Less exps: Rs. 5.00 ------------- Net Sale realized Rs.495.00

Cost in 1984 Rs.27.00 x CI 632 for 2010 Rs.170.00 Amt deposited in Nabard Rs 50.00 ------------- Rs.220.00 -------------- Net Capital Gain Rs.295.00 -------------

B

Amt of purchase in new Res.Property incl Regstr chgs and other exps But not Society transfer Charges Rs.274.00

Please let me have the Capital Gain Tax payable on the above .

section-54ec capital-gain-bonds residential-property section-54 capital-gains income-tax
1 Answers

I am not sure, how indexed cost has been computed by you. Please see below computation and verify yours:

Purchase Year = 1984-85
Purchase Cost = 27
Cost Inflation Index (CII) for purchase year = 125

Sale Year = 2010-11
Selling price = 495
CII for sale year = 711

Indexed Purchase price = 27 x (711/125) = 154
Long term capital gain = 495 - 154 = 341
Income tax on capital gain = 341 x 20% = 68.2

Total gain is Rs 341.

To save tax fully, this gain can be invested into a new house purchase (u/s 54) or into capital gains bonds (u/s 54F).

As new house cost is Rs 274, 20% income tax would be payable on remaining 341-274= Rs 67.

Income tax laws are silent on whether both 54 and 54EC deductions can be utilized simultaneously. So I would advise you to consult a tax professional expert in property matters.

If the above is allowed then you would need to pay 20% tax only on 341-274-50= Rs 17.

Max 50 lacs investment is allowed into capital gain bonds per financial year and investment into these have to be done within six months of sale. If two financial years fall into this six month period, you can even invest 1 crore (50 lacs each year). So you would be able to save tax on remaining 17 Rs also.

Pankaj Batra5212
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