Long term capital gain

Suppose I bought a property for Rs.1000 & sold for Rs. 4000/-. The index after 5 yrs for Rs.1000 was Rs. 1500. Therefore LTCG is Rs. 4000 - 1500 = 2500.

I made a FDR for Rs. 1500/- in my name out of Rs.3000/- (LTCG). Now I bought a Residential house for 2500/- in which I paid Rs.1000 (balance amount form LTCG) and the balance of 2000 I took loan from a nationalised bank.

Now question is do I get the benefit for LTCG if yes then how much & under which section.


asked Jul 25 '11 at 22:25 by satya 1222

If the old property sold is a residential house then if you buy a new residential house for cost more than capital gains, there won't be any income tax payable. This is as per section 54. Home loan taken won't matter, only buying a new residential property with more cost matters.

answered Jul 25 '11 at 23:27 by Pankaj Batra 5.2k320

Deaest Pankaj JI thanks a ton ! thanks 4 the reply. My query is not solved........as I narrate the exact case... (1)I purchased a residential plot (Not A House ) in June 2005 for Rs. 1.10 lacs & sold the same plot (not house) in 6.47 lacs in June 2010. (2) Considering the CII index the acquition cost of the plot is 1.58 lacs. The LTCG is 6.47 - 1.58 = 4.89 lacs. (3)I have purchased a house for 12 lacs in Jan 2011 out of which 9 lacs is the Bank loan. (4) My query is that "will my LTCG be exempted from tax up to the extent of Rs. 3.00 Lacs only ( that is my contribution in addition to the bank loan of Rs 9 Lacs =12 Lacs cost of resi house) Or the full LTCG that is 4.89 lacs will be exempted from tax.". (5) My argument is that the amt of 4.89 lacs should be not taxable because the condition is to reinvest the LTCG of 4.89 lacs which I have done by purchasing a house for 12 lacs. How does it matters that I have invested with my own funds or Bank's loan/ Thanks in advance Satya
(Jul 26 '11 at 00:01) satya
Full 4.89 lacs will be non-taxable as you bought a new house with cost more than 6.47 lacs (sale consideration of plot). Amount paid by loan won't matter.
(Jul 26 '11 at 17:22) Pankaj Batra
Dearest Pankajji Sir, Thanx a ton..... Satya
(Jul 26 '11 at 18:43) satya

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Asked: Jul 25 '11 at 22:25

Seen: 2,301 times

Last updated: Jul 26 '11 at 18:43