I have decided to sale my flat. Please let me know if i make agreement in Apr'12 will it be helpful to save some tax as per new DTC which is under discussion. This flat is registered jointly with my wife. Since as per DTC LTCG will be added to annual income & respective tax slab. I can distrubute LTCG between my & my wifes income. Presently my wife is under 0% slab & myself is under 10% slab.
1 Answers
Sale agreement has not much value in computing long term gains. Its the actual date of transfer (date of sale deed/possession given) that actually is used.
As flat is in joint names, its gains would also be divided among all owners in same ratio in which they own property. As both of you are lower brackets, you would certainly be benefited by new capital gain rules under direct tax code.
Under direct tax code, for long term gain, instead of flat rate of 20% of gain after indexation benefit, new concept has been introduced. Now gain after indexation will be added to taxable income and taxed at per the tax slab. Base date for cost of acquisition has been changed to 1st April, 2000 instead of earlier 1st April, 1981.
Read more here: Capital gain taxation after direct tax code
Thanks Pankaj, But there are difference of opinions, some CA's are suggesting that date & year of agreement will be considered for calculating LTCG & taxation (in my case FY 11-12), no matter weather saler is receiving balance payment installment in next FY or possession given to buyer in next FY. Since in my case as per proposed DTC taxable amount will be reduced by almost by 50%, I am still affraid to come to the conclusion and buyer wants to make agreement in this financial year only. Please suggest. Your immediate responce will be helpful to me to take decision.
Its the date of transfer which is considered for LTCG computation.
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