we want to sell our home the market rate of which will be around 90 lakhs, and invest it in such a way it will be our source of monthly maintainance because my husband does not get any pension,P.F,no other source of livelyhood. How to invest the proceeds?
1 Answers
First, you would need to compute long term gains and income tax by using following method:
Purchase Year = A, Purchase Cost = P, Cost Inflation Index (CII) for purchase year = X
Sale Year = B, Selling price = Q, CII for sale year = Y
Indexed Purchase price = P x (Y/X) = R
Long term capital gain = Q - R = S
Income tax on capital gain = S x 20%
In case you decide to pay income tax, you are free to invest money anywhere after paying 20% income tax on long term gains.
But if you want to save income tax but don't want to buy another residential house property, you can invest into capital gain bonds u/s 54EC for three years to save tax.
Under section 54EC, you can save tax fully if you invest full capital gain amount (S shown above) within six months of sale. Max amount that can be invested into such bonds is Rs 50 lakh in a financial year. If less amount is invested than capital gains, then 20% income tax would be payable on remaining unused capital gains.
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