I have purchased a plot from my mother in feb 2009 at rs.4,00,000 and sold it in sept 2011 at rs.10,00,000. No financial transaction was done while purchasing from my mother. And purchased a flat at Rs.3200000 with home loan of 22,00,000 in Jan 2012. Do i have to pay income tax on capital gain?
1 Answers
If plot was purchased and not gifted to you by your mother, then it would be a short term gain, as three years ownership of plot was not completed. In that case the short term gain of 6 lakh would be added to your taxable income and taxed as per slab rates. There is no way to save this income tax.
But in case you show plot as gifted property (a gift/settlement deed should have been done), then long term gain would be computed with following formula:
Purchase Year by your mother = A, Purchase Cost incurred by your mother = P, Cost Inflation Index (CII) for purchase year A = X
Sale Year = 2011-12, Selling price = 1000000, CII for sale year = 785
Indexed Purchase price = P x (785/X) = R
Long term capital gain = 1000000 - R = S
As you bought a flat for price more than sale consideration of plot, you can save income tax u/s 54F. However there are below conditions for section 54F applicability:
- Possession of new property must be taken within two years from sale of plot.
- You should not be owning more than two residential house(flat/house/apartment) at the time of selling plot.
- If total residential houses owned by you becomes two (including new flat), you should not buy another one within next three years of purchase. Or in next three years, total owned residential houses should not be more than two.
- New flat should not be sold before next three years.
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