senior citizen selling flat wants to avail tax exemption

My father in law is a senior citizen who wants to sell his flat. From the sale proceeds he wants monthly return for his livelihood from day 1. Without paying any taxes is it possible. Please advise.



asked Feb 15 '12 at 18:12 by Abhijit Majumder 1111

First he would need to compute capital gains earned from selling the flat. If flat has been owned by him for more than three years, below is the computation for gains and income tax:

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%

This income tax can only be saved either by buying a new residential property or investing into capital gain bonds.

Please note that only capital gain parts (S) needs to be invested to save tax fully. He can still use remaining sale consideration amount wherever he wants to earn monthly income.

answered Feb 16 '12 at 19:04 by Pankaj Batra 5.2k320


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Asked: Feb 15 '12 at 18:12

Seen: 1,878 times

Last updated: Feb 16 '12 at 19:04