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How to Calculate Capital Gains and What is Indexation ?

by Manish Chauhan · 608 comments

In this post we will learn How to calculate Capital Gains or Losses . A lot of people make mistake in this . If you buy a house in 1995 at Rs 10 lacs and sell it at Rs 20 lacs in 2009 . On how much profit will you pay the tax ? If your answer is Rs 10 lacs , you have no idea how to calculate capital gains . Read ahead to understand .

What is Capital Asset ?

Capital Assets are the properties which can be held by a person . Some examples are Real Estate , Shares , Mutual Funds , Gold and Debt Funds . FD’s and other fixed returns Instruments are not part of it .

Taxation

For taxation of Capital Assets , read this : How to use your looses to Reduce Tax

How to Calculate Capital Gains ?

Most of the people think that

Capital Gain = Sell Price – Purchase Price

But , Actually the real formula is

Capital Gain = Sell Price – Indexed Purchase Price

What is Indexation ?

Indexation is a technique to adjust income payments by means of a price Index , in order to maintain the purchasing power of the public after inflation. We must understand that prices in general also rises, so the actual prices should not be used while computing the profits , rather It should be Indexed as per Inflation in the country ,so that people can get the real value from sale of there assets . Indexation is used in Tax treatment for Debt , Gold and other asset classes

What is Cost Inflation Index (CII) ?

Year CPI
1981-82 100
1982-83 109
1983-84 116
1984-85 125
1985-86 133
1986-87 140
1987-88 150
1988-89 161
1989-90 172
1990-91 182
1991-92 199
1992-93 223
1993-94 244
1994-95 259
1995-96 281
1996-97 305
1997-98 331
1998-99 351
1999-00 389
2000-01 406
2001-02 426
2002-03 447
2003-04 463
2004-05 480
2005-06 497
2006-07 519
2007-08 551
2008-09 582
2009-10 632
2010-11 711
2011-12 785
2012-13 852

How to Calculate Indexed Purchase Price ?

Indexed Purchase Price = Purchase Price * (CPI for current year / CPI for year of purchase)

Once you have Indexed Purchase Price , you can subtract it from Sale Price and get your capital gains .

In some products Long term Capital gains is around 20% with Indexation and 10% without Indexation . In Equities Long term Capital Gains is exempt from Tax .

Let take an Example

 

Purchase Price 1000000
Year of Purchase 1995
Sale Price 2500000
Year of Sale 2008
No of Years 13
Purchase CII 281
Sale CII 582
Indexed Purchase Price 2071174
Capital Gain 428826
Tax with Indexation 85765
Tax without Indexation 150000

 

 

I hope the above example is clear . Below is the calculator I have created for you to calculate Capital Gain tax for your self. Just play with different numbers . Just enter the year of Purchase and Sale and It will figure out the CII (incase it does not, please put CII yourself)

Capital Gains Calculator
I have made a Calculator for you : http://public.sheet.zoho.com/publish/manish.pucsd/temp

Capital Gains Tax with Indexation and Without Indexation

There are some asset classes where you have the choice of using Indexation or not . This is true for debt funds and FMP’s. So the current rate is either 20% with Indexation or 10% without Indexation for Long term Capital Gains .

For Tax without Indexation , you simply find out normal profit (sale price – cost price) and then calculate the tax .

So you can calculate tax using both ways and then choose the one which is lower :) .

How to save your Capital Gains Tax ?

For people who are miser and do not like to pay lot of taxes , govt has provided some relief to them . Govt says that If you dont want to pay tax on your capital gains , you can do following things to save your taxes .

Invest your Capital Gains in Real Estate :If you invest your Capital Gains in Real estate within 2 yrs , you will get the the exemption .

Invest in Capital Gain Bonds :There are some specific bonds issued under sec 54EC , some of them are NHAI or REC bonds . You have to invest in these bonds within 6 months. Generally the lock in period is around 3+ yrs . interest on NHAI or REC bonds is around 5-5.5% .

Tax on Capital Gains can be different for different People

Please note that Capital Gains tax can vary from one person to other person depending on which tax bracket he/she belongs to . It will also depends whether Tax with Indexation or without Indexation works out to be cheaper for him or not .

Note :For calculation purpose the Financial years are business year from April – Mar , Not Jan – Dec . If you buy in June 2009 and sell in Jan 2010 , you are in the same year not 2 different years .

Conclusion

So , In this post we learned how you can calculate capital gains and also take advantage of tax benefits for saving your taxes on capital gains , Your aim should be to understand the process and learn about it, so that you can take informed decisions in your financial life . No one should take advantage of your ignorance and also to take quick decisions and make rough calculations when there is a need. If you know these rules , you can take better decisions

Questions for you

Suppose you are age 30 .
– In June , 2000, You buy 20 lacs Home
– In Aug , 2007, You buy stocks worth 10 Lacs
– In April , 2008 , your sell your house at Rs 30 lacs
– In June 2008 , your stocks have gone down in value are worth Rs 3 lacs now .

What should you do to avoid paying any tax on capital gains made from House ?


In previous post I have discussed “What is NPS , New Pension Scheme” by Govt of India . Read it

 

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{ 606 comments… read them below or add one }

1 Arun June 14, 2009 at 9:25 pm

Ok I read this but I could not figure out this about short term stock transactions

If my mom who is a housewife is doing the stock transactions for me then what happens if she short sells the stock..
She has not other income.. only income is profit from stock sales..
Now will it still be taxed at 15% flat even if its lesser than the lowest tax slab?

Your article says to avoid tax, the goverment says invest in real estate?
What is real estate? Is it only plot or house+plot or flat.. where can I find that info?
Don't kill yourself trying to give these answers, I am just thinking loud..

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2 Manish Chauhan June 14, 2009 at 9:59 pm

"If my mom is a housewife who is doing stock transaction for me" ?

There is nothing like that . Either she does it from your account or from hers , If its done from your account . then its done by you , no matter who does it behind the scene . It will be your income and taxed at 15% (short term) .

tax on Equity transactions do not depend on your tax slab , its just taxed at flat 15% .

Saving from Real Estate . As per tax rules , you can save tax in 2 ways from real estate. When you pay your EMI for home loan , it has principle and interest part , you save upto 1 lac on principle and upto 1.5 lacs on interest .

This is applicable to Readmade residential homes or any house which you build on a plot (House+plot) .

Manish

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3 Arun June 21, 2009 at 5:36 am

Thanks Manish. That sure helped

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4 Manish Chauhan June 21, 2009 at 10:22 am

@Arun

Great !! , I am glad it helped you :)

Manish

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5 Samit July 13, 2009 at 12:44 am

Is 10% LTCG without indexation also applicable for commercial property?

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6 Manish Chauhan July 13, 2009 at 12:49 am

@Samit

As per Section 2 (ea)(i) of the Wealth Tax Act, guesthouse, residential house and commercial building are treated as assets subject to certain exceptions. These assets are liable to Wealth Tax.

Source : Rediff.com

Which means that the tax rules are same for both kind of real estate .

Manish

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7 Satya Vyas August 7, 2009 at 3:47 am

That was very value adding..
i have a question,i am soon about to start my job, but the issue is that I will be joining abroad and then remitting money in india to my account.

The issue is that i dont have to pay any taxes on my remittances, but since the remitted money is in my account only will I have to pay taxes in India as I have spent more than 182 days in India,if so then what source of income I am supposed to show?

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8 Manish Chauhan August 7, 2009 at 8:42 am

@Satya

As per my knowledge the amount earned outside india is taxable here in india .. i am not sure of rules in detail on this ..

Can anyone else help us in understanding this better .

Manish

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9 gopal agrawal November 28, 2009 at 6:10 am

If you earn out of India it is your status which is important that is resident or non resident.
If you remain outside india for more than 183 days in a financial year you will be treated as non resident indian and your income earned out of india will not be taxed in \India.But if you earn out side India and remain ther for less than 183 days that income will be taxed in India along with Income earned in India.
If you want to send money to any of your relative it is best to open and NRE account before goin gabroad and transfer that money from that acccount to anybody you are intrested to give to prevent hurdles of taxation
These transfer of money should be only through banks and not through any havvala transaction .

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10 manish November 28, 2009 at 2:04 pm

Thanks for the Clarifications :)

Manish

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11 Karan Batra August 17, 2009 at 2:30 pm

Is indexation available in case I hold Shares of a non-listed company which I intend to sell??

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12 SANDEEP August 20, 2009 at 1:53 am

I have sold my flat in INDIA and planing to buy a property in UK.
Will i get a tax exemption.

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13 Manish Chauhan August 20, 2009 at 1:25 pm

@Karan

Indexation is not even allowed on shares with listed exchanges. The reason is because LTCG is exempt from tax . thats why

@Sandip

I dont think you will get the tax benefit . The rules will be applicable only if the proceeds are used in Real estate purchase in India , because then it will clash with rules in UK and Indian govt wont get any benefit by your investments .

manish

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14 Karan Batra December 12, 2009 at 12:58 pm

I did check the tax laws and Indexation is allowed in case of non-listed shares

shares which are listed on which STT is paid :- exempt from tax
shares on which STT is not paid ie non-listed:- taxable @ 20%, indexation available

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15 manish December 12, 2009 at 2:43 pm

ok , i didnt knew that its allowed for non-listed shares :) . Thanks for the info

Manish

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16 Reema August 21, 2009 at 5:47 am

Hi,

would investing in real estate to save LT capitaal gains mean buying a new property within 2 years? can the tax be saved by using this capital gains to prepay an existing housing loan which has been purchased 3 years back?

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17 Manish Chauhan August 21, 2009 at 5:51 am

@Reema

You cant save tax on short term capital gain from Real estate (which is before 3 yrs) , and you can save LTCG only if you invest that money in another real estate property within 2 yrs of gains realised .

One thing i am not sure if if you can save tax by investing in something which is already purchased ?

Manish

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18 sreedar May 13, 2012 at 12:11 am

Want to clarify if you say that the reinvestment in new real estate of the capital gain should be made within 2 years from the sale of the property. Which means from the date of sale or from the end of the particular year, i.e, if I sell in July 2012 by when the reinvestment to be made so that I can avoid the Tax, is it July 2014 or Dec 2014.

Meanwhile can a portion of this amount will be avoid to repay my loan for the existing construction going on.

Sreedar

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19 Manish Chauhan May 14, 2012 at 6:26 pm

Sreedhar .. its exactly 24 months . so July 2014 . Also note that if you dont take the decision of selling in the same year, then you need to pay tax . Because no one knows for guarantee that you will be using it in next year or so ,what if you are just lying . so you will have to keep it in “Capital gains account”

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20 Ashish July 2, 2014 at 2:33 pm

Thanks Manish,

One thing I would like to know is – if I am selling my underconstruction property within 2 years of its purchase AND if I am reinvesting it in another property (as downpayment) then am I liable for taxation?

Also, if I park this Short term Capital Gain in Capital Gain Account Scheme (CGAS) and use it in another property (as downpayment) then am I liable for taxation?

Please help.

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21 Manish Chauhan July 3, 2014 at 10:18 pm

No , you will have to pay tax on profit if you are selling it before 3 yrs !

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22 Reema August 21, 2009 at 5:53 am

ok. thanks.

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23 Sivakumaran August 23, 2009 at 3:29 am

Hi, if my income is in the 30% slab and i have a short term capital gains of Rs 50,000 from sale of shares, would i have to pay the 10% tax on STCG as well as 30% as income tax? i am not getting a clear answer for this. thanks

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24 Manish Chauhan August 23, 2009 at 4:16 am

@Shivkumar

you only pay short term capital gain of 15% (changed from 10% to 15% in last budget) .

You dont pay anything else .

Manish

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25 Sivakumaran August 23, 2009 at 4:44 am

thanks a lot, Manish

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26 SANDEEP August 25, 2009 at 5:39 am

Hi Manish,

I had booked the flat in May 2006 and did Registration in March 2009 and now I'm selling the flat in August 2009 so my profit will be short term capital gain or Long term capital gain.

Thanks in advance

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27 Manish Chauhan August 25, 2009 at 10:18 am

@Sandeep

Sorry but i am not sure on this , but by logic its registration date which should matter . Thats the main thing which is on record , so it would be STCG .

can any body else conform this .

Manish

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28 KASTUR SHETH June 7, 2012 at 2:10 pm

YES-IT WILL DEFINITELY SHORT TERM CAPITAL GAIN…..

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29 prapti vahia September 5, 2009 at 8:39 am

i have one row house and i m planning to sell it in this year, my purchase prise is 3.4 lac and i expects 40 lac now, so can u pl. guide me what amt. will come on long term capital gain if i puchase a flat or if i dont want to purchase a flat? what will b my tax with indaxtion and withour indation, i tried your calculater but the figure comes grater in tax with indation than the tax without indation can it possible? can u guide me what should i do? pl. advice

prapti

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30 Manish Chauhan September 5, 2009 at 12:14 pm

@Prapti

Yes its possible that tax from indexation comes more than without indexation , in that case your tax liability will be the lower of the two , your cost price needs to be indexed first as per your year of purchase , so your sell price will be 40 lacs and your cost price will be the indexed one .

The difference will be the profit , which you can invest in another real estate project (flat) within 2 yrs of sale of your current house .

Manish

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31 Geetha Kumari September 6, 2009 at 3:21 am

Hi Manish
We purchased a flat in 2000 Feb for 7 lacs (Builder cost+registration) Spent again around 4 lacs for interiors(direct execution by us).Sold the flat in 2008 nov for 24.5 lacs.We have not put the money in Capital gain account.But we have purcahesd a new house (agreement done in 2007with another builder )for which we have paid thru loan Rs 18lacs(payment done by may 2008)balance 6 lacs paid in march2009 after selling the old flat. registration is planned in 2009 October .Could you please tell us whether we need to pay CG tax in such situation as detailed h/w?If so, how much it will work out.
Thanks & Reg
Mrs.Pilla

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32 Ravibabu April 30, 2012 at 5:03 pm

From another source on this subject on the internet:
Here, the answer is in the taxpayer’s favour, in as much as, there is no necessity of any live link or one to one correspondence between the capital gain amount and the investment in fresh property. To put it differently, a taxpayer can for example, acquire the fresh property through a housing loan and invest the sale proceeds in a fixed deposit and still avail of the exemption. The law is satisified as long as the amount of long-term capital gain per se, gets invested in fresh property-the source is immaterial.

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33 Manish Chauhan September 6, 2009 at 4:09 am

@Geetha

You total cost was 11 lacs and your indexed cost is

>>> 11 * 551/406.0
14.928571428571429

15 lacs approx .

Your profit in that case would be close to 9.5 lacs . Now you have used 18 lacs from loan and only 6 lacs from the profits . which means that rest 3.5 lacs profit would be taxation , and its will be 20% now … (If you want indexation) .

So close to 70k should be your tax here .. All figures are approx figures . You should look for a tax expert for details ..

Manish

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34 Amit October 28, 2009 at 2:41 pm

Good Job.
Now tell me, what happens for a property bought before 1981-82… lets say in 1971.
I understand one needs to compute the "Fair Market Value" of the property as on 1.4.1981. How is that done? How does one reach such a value?
e.g. I bought a property in 1971 for Rs. 25000 and sold it in 2009 for 21600000. Let's say I spent an actual (not inflated) sum of Rs. 500000 on renovation and repairs of the house over the years. What is the profit to be put up for capital gains with indexation and without indexation.

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35 Manish Chauhan October 29, 2009 at 2:23 am

@Anil

oops .. I have really no idea about that .. This is rare case. there are hardly cases like this where one has hold an investment for so many years .

Your invest ment return has been around 19.5% CAGR which is very very good :) . Congrats .. Let me see if i can get any info on this . please share this info if you get from somewhere .

Manish

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36 rushabh November 13, 2009 at 2:07 pm

how & where to invest for capital gain bonds?

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37 manish November 13, 2009 at 2:13 pm

You need to search this on net and let us know , I am not sure where to buy it from . But I am sure it will be there on Net .

Manish

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38 Srikanth November 14, 2009 at 10:43 pm

Hi Manish,

This is a nice blog you maintain. Few people understand cap gains accurately unless they make one or two mistakes here and there. This page sure will help those people address the cap gains issue more confidently. Keep up the good work !

Srik
.-= Srikanth´s last blog ..YeddyGaddy, ReddySteady goto sush’amma’ =-.

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39 manish November 14, 2009 at 11:00 pm

@Srikanth

Yes , You are correct .. people dont know these basic stuff and hence they loose out on many things .. I am sure knowing these things would be great …

Manish

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40 ANN November 21, 2009 at 12:34 am

Hi,
Suppose I have bought a land for 1.6lacs in 2005 and sold the same for 16.5lacs in 2009 and used the money gained to pay off my home loan which I took in 2006 for a flat for which i was paying EMI till date and the property is only ready for poccession in 2009 december, will I be excempt from capital gain tax or how much should I pay towards capital gain tax if I have no other source of income. Appreciate your reply.

Thanks ,
Ann

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41 manish November 21, 2009 at 12:42 am

@Ann

So if you invest your proceeds within 2 yrs of sale it should be expempted . But the property was bought in 2006 , Here I am not sure because the deal took place after just 1 yr of buying the Land . You should look for a CA or Tax expert for this .

Manish

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42 Srikanth November 26, 2009 at 2:37 pm

Hey Manish

This article still does not explain one condition. Suppose I bought a house in 1990 for Rs.x, sold it in 2006 for Rs.y. But if in between I also did some structural enhancements for Rs. z say in 1995. The how will the indexed value be calculated?

Many thanks for replies in advance
Srikanth
.-= Srikanth´s last blog ..30000Km drive report for Swift VDi DDiS =-.

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43 manish December 12, 2009 at 2:47 pm

oops .. I am not sure about this .. But the way it should work is that it should not be covered because when you sell it , you will anyways reap the benefit of that while selling , so the Selling price would incorporate that .

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44 vineet May 6, 2011 at 10:55 pm

I believe the advantage of investment made in 1995 is added in 1995 to the indexed value arrived at in 1995. Thereafter this new value used for computation. I am no tax wizard or accoutant, i am here for a query, so please index by answer for inflation :-)

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45 Sam December 20, 2009 at 10:39 pm

@Srikanth, you need to index x from 1990 to 2006 and Rs z from 1995 to 2006. The sum will give you your total indexed cost.

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46 manish December 20, 2009 at 11:44 pm

hmm… I think that makes sense .. Good one :)

Manish

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47 vinay December 26, 2009 at 12:12 am

Hi Manish,

Flat costing 8L was bought in 1995 and sold at 30L in Dec 2009. How much tax I hv to pay. I hv kept the sum of 30L in Capital gains account of Vijaya bank. To avoid paying LTCG tax, do I need to invest the full 30L or only the taxable amount ? If I pay tax to the govt, can I keep rest of the amt in FD to avail interest for my retirement benefit? Do I hv to pay tax on that sum every year even if I keep that amt in FD? If I buy a new flat, can we include registration and stamp duty charges for calculation in order to avoid LTCG taxation?

Regards

vinay

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48 manish December 26, 2009 at 5:47 am

Vinay

You have to pay tax only on profit and not full 30 lacs , Also your profit will not be 22 lacs , it would be lesser because your Cost price will not be taken as 8 lacs , but more because you can use indexation benefit (Inflate the cost) . See my post on Indexation .

I can see that you want to avoid paying the tax . Thats possible . Here is how

1. You can use the profits to invest in another residential property within 2 yrs .
2. you can invest the amount of profit in 5 yrs lock in NHAI or REC bonds , that way you dont have to pay tax ,

Also you can pay the tax and keep the amount in Bank, but then the amount you get every year will again be taxable because its a brand new income for you . this happens with any money you keep in bank , Bank interest is always taxable no matter what .

Manish

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49 Vinay December 27, 2009 at 1:22 pm

Hi Manish,

Txs for the prompt reply. Just correct me if I m wrong.
So by using indexation, my indexed purchase value of my flat becomes Rs 1797683; so my taxable income is Rs 1202317. So actual tax is 20% of this amt i.e. Rs 240463. So options I have are:
1.. Pay this LTCG tax of Rs 1202317 to the govt, keep the remaining money i.e. Rs 2759537 in the bank and pay annual taxation on the interest I earn on my FD.
2. Invest Rs 1202317 in some residential property (and not whole 30L) in 01 year from the property sell of date and save tax of Rs 240463.
3. Put Rs 1202317 in REC or NHAI FD for lock in period of 05 yrs. But initiate this within 06 months of the selling of original property.

Waiting for the advice.
Kind regards.

vinay

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50 manish December 27, 2009 at 1:26 pm

Yes ..

2. You can pay invest in a residential property within 2 yrs , not 1 yr .

Also , you can pay 10% tax on profit without indexation incase its coming lower than 20% after indexation :)

I would say what we have discussed here is basic , Its matter of lacs of rupees , better hire a Tax expert . He would advice in much detail :)

Manish

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51 Vinay December 30, 2009 at 4:59 pm

Hi Manish,

As I sold my property in Dec 2009, wht is CII for this period? It cannot be 582 as it is meant for transactions bet April 2008 to March 2009. Pl clarify!

Regards
vinay

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52 manish December 30, 2009 at 9:20 pm

Its 632

Manish

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53 Rajesh July 31, 2012 at 1:00 pm

Hi Manish,

Three questions in connection to Long Term Capital Gain amount:
1. Do we have to declare this gain in the IT return for the financial year in which the gain occured? Or can it be declared once the gain amount has been invested in buying a new residential property?

2. I know we have a Capital Gain Accounts Saving with State Banks where we can park the capital gain for 2 / 3 years from date of sale to avoid the taxation. What if we don’t put the amount in such an account and leave the gain amount in a regular savings account?

3. Is there a time frame (like 6 months in RUREC or NHAI bonds case) for investing in Capital Gains account ?

Would greatly appreciate an early reply on this.

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54 Manish Chauhan July 31, 2012 at 1:47 pm

Rajesh

1. You need to show it

2. Its 2 yrs . If you dont put it in CGSA , then its like your income in the year , and if you have not paid tax on it , then obiviously, its a violation of tax rules

3. its 6 months

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55 Vinay December 27, 2009 at 1:27 pm

Hi,
In point 1, I wrote Rs Rs 1202317 as tax; but it shud b read as Rs 240463.
Txs
vinay

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56 Vinay December 27, 2009 at 1:32 pm

Sure..
txs!!

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57 Ramakrishna September 4, 2013 at 12:38 am

I have a few questions..

1) If you keep the money in the NHAI / REC bonds, will the returns from these bonds be taxable?
2) You can avoid LTCG tax if you invest in another property with-in 2 yrs or before x years . But I am not sure what is x. it must be less than 2. Does anyone know what is x?

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58 Manish Chauhan September 7, 2013 at 5:39 pm

1. No , its not taxable

2. No idea !

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59 NILESH BAGAJI January 12, 2010 at 3:05 pm

could you calculat capital gain of share listed & non listed?

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60 manish January 13, 2010 at 10:46 pm

ok , looks like LTCG tax on them is 20% with indexation or 10% without indexation on unlisted shares . This is just like tax is calculated on debt funds and real estate .

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61 Gagze January 13, 2010 at 4:39 pm

Hi,

An investment in a private limited company was made at Rs 10 per share and later sold at Rs 100 a share after 2 years. In this case what would be the taxation % rate and would indexing be allowed on sale of Pvt Ltd Shares?

You are doing an excellent job, do keep up the great work in educating people like us.

Thanks in advance.
Gagze

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62 Manish Chauhan January 13, 2010 at 6:01 pm

Gagze

Rules are not different for pvt and non pvt companies .

Its just that

If STT was paid while buying the shares : Then no tax after 1 yrs on any profit as Long term capital gains are currently exempt.
If STT was not paid : Then the profits will be added to your salary and taxed .

Manish

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63 Gagze January 13, 2010 at 6:35 pm

Hi Manish,

Thanks for the prompt response however, I am told by the CA’s that for private limited companies the rate for capital gains on shares sold is 20 % even though I held them for over a year. I am certain that the STT was not paid therefore per your response the profit would be taxable along with my salary. (does the same hold true for public limited companies as well). Can you please re-check and explain in more detail.

Thanks in advance.

Gagze

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64 manish January 13, 2010 at 10:23 pm

Gagze

ok , looks like LTCG tax on them is 20% with indexation or 10% without indexation on unlisted shares . This is just like tax is calculated on debt funds and real estate .

Manish

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65 S. Krishnamoorthy August 23, 2010 at 3:48 pm

Dear Shri Manish,
Different CAs give different answers on the vexed question whether the benefit of indexation is applicable for the sale of equity shares of a private limited company, the period of holding the shares being more than 1 year. What is the decision of IT Department? Whether indexation is applicable or not?

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66 Manish Chauhan August 23, 2010 at 7:29 pm

What I told you was based on what I read from net . You should consult a trusted CA

Manish

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67 paramesh July 25, 2011 at 5:25 pm

Sir,

I understand in case of unlisted / private limited co share, period for holding to claim long-term gain is 3 years. Where as it is 12 months in case of listed shares & securities as per Section 10(23D).

Kindly clarify is my understanding is correct

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68 Manish Chauhan July 25, 2011 at 10:38 pm

Paramesh

Yes , you will also be eligible for Indexation benefits :)

Manish

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69 happy January 15, 2010 at 2:14 pm

i found this site is really very intersting n helpul, i have a query i have sold some gold in 2009-10 which i bought in yr 1980, now i want to know what will be capital gain tax on it. yhanx

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70 Manish Chauhan January 15, 2010 at 3:14 pm

Happy

You should be paying 20% tax on profits after indexation .

Manish

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71 uday patil January 22, 2010 at 2:28 pm

hi manish
found your info very interesting. you haven’t mentioned about long term capital gains tax for privet limited companies ? kindly elaborate. thanx and regard

uday patil

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72 uday patil January 22, 2010 at 2:31 pm

hi manish
i will be more elaborate. what i mean is what if a privet limited company buys a land in say 2006 for say 10 lacs and sells it in 2010 for say 20 lacs. what would be capital gains tax liability for pvt. ltd. company.
tahnx and regards

uday patil

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73 manish January 22, 2010 at 3:54 pm

Uday

I have asked a tax expert to comment on this . I have no clue .

manish

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74 Kishan February 4, 2010 at 1:35 pm

Hi Manish,
Excellet Blog!!..very insightful..
I have a question though.
My Father got a flat from a property builder in exchange of a chawl owned by my father in the year 1995
He sold the flat in the year 2008 at 30Lacs. Now we don’t have an exact Purchase price to be able to calculate the Capital gain of the property. what do you suggest we do?
How can i calculate the Indexed Purchase price? The rough Market value of the flat in 1995 was 10Lacs but we don’t have evidence of this price.
Also since the two year term after the flat sale is not complete yet, how much do i have to invest if i have to buy a different property so that i dont have to pay on the capital gains?

Thanks in advance for your Response

Regards
Kishan

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75 Manish Chauhan February 4, 2010 at 6:38 pm

Kishan

thanks for your comment :) . What you have asked is a common question . Incase you dont know the property value , you have to hire a “valauer” who are certified people to value the real estate at some point in time (you have to find out how to find them , i dont know) .

now if they value that its value was 15 lacs , then you can index it and then find your profit . Now if your profit comes at 8 lacs , then you have to invest this 8 lacs only in the next real estate project and you can save tax on that . Got it ?

manish

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76 Kishan February 5, 2010 at 8:49 pm

Thanks Manish!

That was really helpful!

Cheers!

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77 Marshal February 9, 2010 at 12:59 pm

Manish,
“In Equities Long term Capital Gains is exempt from Tax”!

Just to confirm, if i buy today shares/MF and sell after one year. There will be no tax on profits. Is my understanding correct?

Marshal

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78 Manish Chauhan February 9, 2010 at 1:05 pm

Marshal

Didnt you know this ? Yes that is correct. Long term Capital gains from Equity (Shares and Equity funds [65% or more in Equity] ) are exempt from tax given the STT is paid by you , which you pay anyways when you buy from trading account .

So if you buy shares or Equity funds (tax or non tax saving) , any profit you make by selling the fund after 1 yr is all yours , NO TAX .

For less than 1 yr , there is flat 15% tax (2008 , it was 10%) .

Manish

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79 Marshal February 9, 2010 at 1:42 pm

Manish,
I was testing you :)
just kidding.. i know but confirmation is always better…

Cheers
Marshal

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80 Naresh February 10, 2010 at 11:43 am

Dear Manish,
I have bought 500 shares from a pvt ltd company not listed in stock exchange but registered with ROC in 2006 june,bonus shares of 4500 was issued in feb 2008.I sold the total 500 shares in nov 2009.Now clarify if the total value of sale -cost of buying will attract LTCG or STCG. If LTCG, do I get option of paying by indexation or without indexation? If the difference of gain was about 6lacs, what could be approx tax to be paid? Pls help as this is my first experience in capital gains

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81 Manish Chauhan February 10, 2010 at 8:49 pm

Naresh

there is no point of STCG and LTCG here . you have not paid STT , so all the profits are taxable as per your slab .

manish

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82 vinay February 13, 2010 at 4:53 pm

Hi Manish,

I am an NRI for long years and have sold a residential property in India in Dec 2009. Capital gains account was opened in December 2009. I am a bit confused, What is the maximum duration before which I should buy another residential propert in order to avoid paying long term capital gains tax? Is is 06 month or 12 months irrespective of NRI or resident indian?
Regards

vinay

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83 Manish Chauhan February 20, 2010 at 2:46 pm

Vinay

Its 2 yrs .

Manish

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84 Ashok Kumar February 18, 2010 at 6:56 pm

Dear Manish
This querry is in respect to Long Term Capital Gains.I am aware that the LTCG’s can be invested in buying a residential house within one year before to two years from the date of transfer or construct a residential house within three years of the date of transfer of the original house.My question is that if my LTCG is say Rs one crore then can I construct a residential house for say seventy lacs and also buy a residential flat worth thirty lacs and avoid paying any tax towards LTCG’s.
The problem is that I have been getting conflicting responses.I will be grateful if you could clarify.
Thanks a ton .
Ashok

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85 Manish Chauhan February 20, 2010 at 2:45 pm

Ashok

The only rule is that you have to use the proceeds in another project , so putting money in two should be ok . That should not be against the rule . but if the money involved is 1 crores , i would suggest consulting a tax expert .

Manish

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86 Ashok Kumar February 20, 2010 at 7:41 pm

Dear Manish,

First of all let me thank you for your prompt response.

Thank you for clarifing the issue,an answer which was being propagated by the majority.

As advised I shall take the help of a Tax Consultant.

Wishing you all the best.

Sincerely

Ashok

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87 Manish Chauhan February 22, 2010 at 3:21 pm

Great :)

Best of luck . Keep commenting :)

Manish

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88 abhishek February 19, 2010 at 5:35 pm

i have sold my polt of land on 12-3 09 and i want that i pay the tax without indexing it can it possible for me that i pay tax without indexing the cost of land and pay tax as 10% slab rate please make me reply as soon as possible

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89 Manish Chauhan February 20, 2010 at 1:32 am

Abhishek

What was the buy date ? If the tenure is not more than 3 yrs than there is no way you can save any tax , the profit will be added to your income and taxed , where as if its more than 3 yrs then either 10% without indexing or 20% with indexation .

Manish

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90 abhishek February 20, 2010 at 1:03 pm

i bought the land on 01.01.1981, when i filled in my software the 10% tax rate is disaalowed by the software

is on land without indexing is possible to determine the tax rate , well i sale out the land on 12.03.09.

plese make me reply as soon as possible

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91 Manish Chauhan February 20, 2010 at 1:22 pm

Abhishek

forget software , they are dumb .

You will have to pay the tax at 20% with indexation or 10% without indexation on your profits .

You can also save the tax on this , by either using the profits by investing in other real estate investments within 2 yrs or investing in REC 0r NHAI bonds :)

Manish

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92 abhishek February 20, 2010 at 1:30 pm

when i talk with income tax officer he said that without indexing is not allowed on plot of land

so plese me clarify wheteher it is allowed or nt.

officer said that without indexation benefit is allowed on equities shares and bond nt on the land so plese make me clear that can i pay tax witout indexation on plot of land for fy 2008-09

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93 Manish Chauhan February 20, 2010 at 1:37 pm

Abhishek

We were talking about flats and real estate property in general , if the guy you are talking to is a tax expert than you should take his words .

Manish

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94 Naveen February 27, 2010 at 12:05 pm

A property (plot of land) was purchased in 1979 from a govt scheme for a small value then. It was sold in 2010 by the holder, who is aged 83 now & has many grown up children who are beneficiaries. He himself does not have taxable income.

Indexation commences only from 1981-82. Grateful if you could please advise how capital gains tax can be computed. Will it be a flat 10% without indexation or 20% with indexation ? If indexation is applicable, how do we do it since it starts only from 1981-82 ?

How much of the tax on capital gains can be saved by investing in NHAI or REC bonds ? Is there a limit on investment into these bonds ?

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95 Manish Chauhan February 27, 2010 at 3:06 pm

Naveen

The beneficieries are entitled to get any share only after the actual owner of the land dies , not before that .

If a property is bought before 1981 , in that case one has to find a “Valuer” , there are property valuer’s who estimate value of property in year 1981 . Once you get that value you can then apply normal indexation rules.
All the profits can be investing in those bonds , no limit 5 guess .. check it

Manish

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96 Yogesh March 11, 2010 at 10:13 am

I wish to know correct (and current) rules of setting off Capital Gains related to Shares and Mutual Funds. I have done breakup of the Capital Gains as rules for ‘Equity Oriented’ mutual funds are different from ‘Debt Oriented’ mutual funds

Here is the break-up:

a) This year: Equity Based Mutual Fund Short Term
b) This year: Equity Based Mutual Fund Long Term

c) This year: Debt Based Mutual Fund Short Term
d) This year: Debt Based Mutual Fund Long Term

e) This year: Equity stocks Short Term
f) This year: Equity Stocks Long Term

g) Last year: Equity Based Mutual Fund Short Term
h) Last year: Equity Based Mutual Fund Long Term

i) Last year: Debt Based Mutual Fund Short Term
j) Last year: Debt Based Mutual Fund Long Term

k) Last year: Equity stocks Short Term
l) Last year: Equity Stocks Long Term

——————————————————————

I am confused about the rules used for set-off. But following is what I think (which may not be correct)

m) Last Year’s Equity Long Term which cannot be carried forward is = h + l (permanent loss)
n) Last Year’s Debt Long Term that can be carried forward = j
o) Last Year’s Debt Short Term that can be carried forward = i + k

p) This Year’s Short Term so far = c + e
q) This Year’s Debt Long Term so far = b + d + f(?)

r) Short Term offset = p – o = Taxed? or can be offset with ‘s’
s) Long Term offset = n + q = Still available for offset

But if ‘r + s’ is allowed then it is available for offset next year

Yogesh – kulkarniay at gmail dot com

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97 Manish Chauhan March 11, 2010 at 2:11 pm

Yogesh

Can you give an example on this .. its little complicated for me to understand . may be things have changed , we can find out .

manish

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98 Yogesh March 12, 2010 at 4:37 pm

Just some figures below:

a) This year:Equity Based MF ST : 0.0
b) This year:Equity Based MF LT : -69945

c) This year:Debt Based MF ST : 71572
d) This year:Debt Based MF LT : 244547

e) This year:Equity stocks ST : 288121
f) This year:Equity Stocks LT : -56701

g) Last year:Equity Based MF ST : 0.0
h) Last year:Equity Based MF LT : 12154

i) Last year:Debt Based MF ST : -252751
j) Last year:Debt Based MF LT : -255094

k) Last year:Equity stocks ST : -91317
l) Last year:Equity Stocks LT : -58429

——————————————————————

m) Last Year’s Equity LT which can not be carried forward is = h + l = -46275 (permanent loss)
n) Last Year’s Debt LT that can be carried forward = j = -255094
o) Last Year’s Debt ST that can be carried forward = i + k = -344068

p) This Year’s ST so far = c + e = 359693
q) This Year’s Debt LT so far = b + d + f(?) = 117901

r) ST offset = p – o = 15625 more (Taxed?) or can be offset with ‘s’
s) LT offset = n + q = -137193 (still available for offset)

But if ‘r + s’ is allowed then 120k is available for offset next year

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99 Yogesh March 22, 2010 at 9:00 am

Anyone, who can suggest me correct set-off rules with given example?

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100 A Roy March 11, 2010 at 1:14 pm

If I take a personal loan and finance purchase of shares through share market and then hold them for more than a year. What are the implications?

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101 Manish Chauhan March 11, 2010 at 1:59 pm

A Roy

Both of them are not related to each other . Taking personal loan is not related . you pay EMI on your loan and what ever profit you make on shares will be tax free .

However the risk is emmense , dont try this . First point is that making profit from direct investing is tough and not advisable , then if you make any loss , it would be bad coupled with high interest you pay on loan , this does not make sense atall..

Better choice would be to gamble in casino :) unless you are a market expert and have experience in minting money from stock market

Manish

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102 A Roy March 11, 2010 at 2:37 pm

Thanx Manish. You are proving to be an absolute asset by providing this service. One more query. Is profit from futures and options taxable as short term capital gains @ 15% or will it be treated as income from other sources and taxed according to slabs.

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103 Sunny March 14, 2010 at 2:46 pm

sir
i have earned profit of 12000/- on shares over a period of six months and loss of 3673 on selling few shares in 2008-09 financial year. what is my tax liability.

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104 Manish Chauhan March 14, 2010 at 4:10 pm

Sunny

I would consider that the profit u made in shares was in year 2009-2010 and the losses you made were in year 2008-2009 . Now you can adjust this loss with profit only if you declared the loss in your tax return for 2008-2009 , else forget it . there is no proof of it now .

Manish

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105 Muthu March 16, 2010 at 11:37 pm

Hi,
With respect to Short term capital gains on sale of property/Apartment I have the following queries.
1. Can the interest paid to the bank for Home loan be taken/added to the purchase price ?
2. Can any closure charges pais to the Bank on account of Home loan be added to the purchase price ?
3. Can amount paid for water connection, Electricity connection be added to the purchase price ?

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106 Manish Chauhan March 17, 2010 at 10:31 am

Muthu

No , the amount you put in the registration is taken as the purchase price .

Manish

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107 Vicky March 18, 2010 at 12:09 pm

My wife has annual income of one lakh (from other than shares) in FY2009-10.She made a loss of Rs. 22000 in derivative trading (F&O) this year and is holding equity of less than one year with profits of around same amount (22000) . Can she offset the derivative loss by selling shares before 31.3.2010 or is she liable to pay short term capital gains tax @ 15% even if her income is non-taxable .

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108 Manish Chauhan March 18, 2010 at 12:28 pm

Vicky

She will have to pay 15% tax , no matter what tax bracket is she in , Derivative profits and looses are considered as speculative , so you cant offset it with anything :)

Manish

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109 Vicky March 18, 2010 at 12:53 pm

Thanx Manish for the prompt response.
Can u elaborate on the derivative losses /profit are speculative part .How does she show the loss in IT reurn , can it be carried forward to next year . Is this speculative trading to be treated as business .Can u recommend any literature for furthur elaboration.
Thanx in advance . yr website is a great help to people like us.
Vicky

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110 SAM March 19, 2010 at 2:35 pm

Hi,

I had purchased house in November 2004 worth 2600000, plus stamp duty, registration and legal another 150000. Now I am selling this house in 5700000 in March 2010. I am buying another house worth 4400000 in April 2010, how much would be the capital gain for me.

I had taken loan from bank of 2350000 in 2004 and rest was my own contributuion, I had spent about 600000 on purnishing on this house. Now I am clearing this existing loan and taking another 2000000 for the new house.

Can someone please help me understand how much tax liability I have due to these transactions.

SAM

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111 Manish Chauhan March 19, 2010 at 3:36 pm

Sam

on a first look , seems like your profits are not more than the new house costs , so if you invest in new house now .. there wont be any tax, however its always better to meet a CA for get internal details . This blog is there for very general information ..

manish

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112 SAM March 19, 2010 at 4:03 pm

Thanks Manish for the promt reply, I will be meeting my tax consultant in cuple of days to clear things, was browsing through and found out this thread so thought of asking people here as well.

Thanks a lot.

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113 Vishal Khera March 21, 2010 at 3:48 am

Manish,

Excellent blog, gives so much knowledge 

I have a question regarding calculation that needs to be done to check if my gain is long term or short term. I will explain it with an example…

Suppose I purchase shares of a company as per pattern below (all dates are in DD/MM/YYYY format)…

Date No of Shares Price
01/11/2008 20 100 (My average price is 100 for 20 shares)
01/02/2009 20 200 (My average price is 150 for 40 shares)
01/05/2009 20 300 (My average price is 200 for 60 shares)

Suppose I sell my shares as per transaction below

Date No of Shares Price
28/02/2010 60 400

If I calculate on average basis, my average investment as of 01/05/2009 is 200 X 60 = 12000. And the sale of shares has given me 400 X 60 = 24000.
So my gain on average basis is 12000.

In this case how do I calculate if my gain is long term or short term? It is actually long term for the first two transactions as my date of sale is greater than 1 year for the first two investments?

Can I do the calculation the way below…

For the first two transactions my investment is 150 X 40 = 6000
Sale of these shares has given me 400 X 40 = 16000
So gain is 10000, can this be considered as long term gain?

For the third transactions my investment is 300 X 20 = 6000
Sale of these shares has given me 400 X 20 = 8000
So gain is 2000, can I consider only this as short term gain that attracts tax?

Regards
Vishal

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114 Vishal March 25, 2010 at 5:24 pm

Manish, did u get a chance to check the query above?

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115 Manish Chauhan March 25, 2010 at 7:43 pm

Vishal

Yes , you are correct .. thats how it has to be calculated .

manish

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116 Vishal March 26, 2010 at 8:50 pm

Thanks Manish.

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117 pari March 22, 2010 at 11:52 am

Is indexation applicable on LTCG on listed shares on which STT is paid?

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118 Manish Chauhan March 22, 2010 at 3:17 pm

Pari

Its not .. as its tax free at the moment

Manish

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119 pari March 22, 2010 at 3:38 pm

Hi i m a c.a student and practically i know its tax free bt in our xams if we have to show the calculation then shud we index the purchase cost or not,,, plz reply keeping in view academic considerations. and specially for LTCG of STT paid listed shares.

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120 abhishek March 25, 2010 at 7:24 pm

well as we all know that us 10(38) any long term capital gain arise from listed share on whichSTT is paid then there is no question of using indexation or without indexation because its always tax free the whole amount u earned from tht amount which is u invested is tax free so no use of word indexation if u gonna use it then it again nothing gonna make difference because answer remain the same tht it is always tax free
well in exam we need nt do calculation of it just write down the sec and thts why it is tax free no further calculation required

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121 kapil gupta March 23, 2010 at 12:04 pm

Manish,
You have replied to this question before, But One CA has told me otherwise.
You say STCG(in shares) is taxed at 15% irrespective of whether any other income is Zero.But I was told that Upto 160000/-(exemption limit) , there will be no STCG tax and after that only will there be tax of 15%.

Kapil

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122 Manish Chauhan March 23, 2010 at 11:25 pm

Kapil

Your CA is wrong . Short term capital gains from sale of shares are taxed @15% special rate. It will not be added to regular income. The tax on regular income if any + special rate 15% tax on STCG will be your tax. So even if total income for a year is say 50,000 which is profit from shares , you have to pay 15% tax.

Inputs from : Rishabh Parakh , CA Pune .

Manish

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123 kapil gupta March 25, 2010 at 11:38 am

Manish,
I am a bit confused.My CA also insists that if total income is less than 160000/-, then no tax has to be given.Also I found few links on the web that says the same thing that no tax has to be given if income is less than 160000/-.

http://www.raagvamdatt.com/Long-Term-and-Short-Term-Capital-Gain-Income-Tax-Calculation/148/

Please check.

Kapil

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124 hardik March 24, 2010 at 12:51 pm

i am going to receive a property as a gift by my father. i want to know if i can sell the property as soon as i receive the gift and buy a new property to claim exemption u/s 54. and will i be allowed to take indexation from the year my father had purchased that property or the year when he transfered it to me.

plz any1 let me konw

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125 Manish Chauhan March 24, 2010 at 2:58 pm

Hardik

I think you should be able to get all the benefits you father was suppose to get .. just make sure the documentation is correct and as per law .. check with a tax expert instead .

manish

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126 hardik March 24, 2010 at 1:32 pm

and will my dad have to pay gift tax or not.

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127 Manish Chauhan March 24, 2010 at 2:58 pm

You might not have to pay gift tax .

Manish

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128 abhishek March 24, 2010 at 3:08 pm

dear sir,
i have registery of ikrar nama is this is valid proof for sales consideration

registery of the land is nt made but the power of attorney is transfer to the party and the same is register with the registrar and its was my sales considered which was registered with registry
so does it effect anyhow my capital gain calculation or it quote this for capital gain calculation of land
adviced me

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129 Mahesh April 3, 2010 at 2:54 pm

If I sell my land in india with LT capital gain 95 lakh .Can I save tax and how?

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130 Mahesh April 3, 2010 at 3:10 pm

Hi
If I sell plot and earn capital gains.Can buy a Flat and save Tax?What is the max amount LT capital gains on which tax can be saved.

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131 Manish Chauhan April 3, 2010 at 3:31 pm

Mahesh

you can either invest in another real estate within 2 yrs or invest the profits in REC or NHAI bonds . thats will save all the tax .

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132 Mahesh April 4, 2010 at 6:02 am

Thanks Manish,
But I heard we can not invest more than 50 lakh in LT capital gains in REC or NHAI bonds
Plus I will get this gain after selling a plot not a house. Can I still save after buying a FLAT.

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133 DEEPAK April 12, 2010 at 11:41 pm

I had purchased a shop in Apr 2008 for Rs 13.5 Lacs in my wifes name. Now in Apr 2010, we are selling the same for Rs 20 Lacs. My wife is a housewife and do not have any other income. What should be the Capital gain applicable and how can we save the same. Thanks for your help in advance.

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134 Manish Chauhan April 12, 2010 at 11:47 pm

DEEPAK

You cant save it as the profit is not after 3 yrs . it will be added to your salary .

Manish

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135 Akshay April 20, 2010 at 2:45 am

Hi Manish,
Article is really informative and detailed, I have one question for you.
I purchased new House for 56lac. + Registration exp.3lac. in Jan 2010 and paid 48lac from Housing loan and balance 11lac from own resources.
In April 2010 I sold my old House for 38lac which I bought for 21lac in Feb.2004. After Indexation Capital gain would be about 10lac (approx.).
My question is, do I still need to deposit this 10lac Capital Gain towards my Housing loan or payment of 11lac from own resources would be considered as investment from capital gain.

Thanks,

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136 Manish Chauhan April 20, 2010 at 10:24 am

Akshay

As the registration date for first house is earliar than the sale of new house , i dont think it can be used for capital gain adjustment . You might have to pay the tax . I recommed you see a CA on this .

Manish

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137 Akshay April 21, 2010 at 8:55 pm

Hi Manish,
Thanks for reply, my understanding was based on following fact, copied from some other article. Any thoughts…
Tax on long term capital gain can be avoided if the sale relates to a property other than one residential accommodation and reinvested in any residential property within a period of 1 year before or 2 years after the date of transfer (Section 54 F).

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138 Manish Chauhan April 21, 2010 at 9:07 pm

Akshay

Yes , but your second house was purchased before selling another one , so if you want to save tax on this one , either you use the profits to buy some other property or put that profit in REC or NHAI bonds .

I would suggest to see a CA , my knowledge is limited on this .

Manish

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139 Swaminathan May 8, 2010 at 4:47 pm

Sir,

I am not a salaried person. I bought a vacant plot in year 2003 and sold it in year 2010. From year 2003- 2010 I do not work and have no income. When calculating the capital gain tax for the above sale, can I use standard deduction for the years 2003-2010 for the capital gains.

i.e

if standard deduction/exemption limit for each year is assumed to be Rs 50000. from year 2003.

then total standard deduction between 2003-2010 is : 7 x 50000 = 350000.

So the taxable capital gain is : cost inflated capital gain – 350000.

Sincerely,

Swaminathan.

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140 Manish Chauhan May 8, 2010 at 4:52 pm

Swaminathan

Not sure of the standard deduction part, i think it should be used in the same year of claim , however you can use the indexation .

manish

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141 sugeesh May 23, 2010 at 12:55 pm

I purchased a flat in Dombivli for Rs. 10 Lakhs in April 2007. I wish to sell my flat in June 2010 at Rs. 26 Lakhs. How much will the Tax will be.

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142 Manish Chauhan May 23, 2010 at 3:45 pm
143 goutam das June 4, 2010 at 10:41 am

Hi,
I had been allotted & purchased some shares in the nineties. There was no STT.
Now I’d like to sell these shares.
If I pay stt on sale, what would be the tax on ltcg?

Thanks,
Goutam

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144 Manish Chauhan June 4, 2010 at 11:06 am

Goutam

You will have to pay tax on that , the rule only applies to shares bought after 31st Mar 2003 , look at http://www.rediff.com/money/2006/jan/16tax.htm

Manish

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145 Athreya July 3, 2010 at 12:21 pm

Hello Manish,

We, living in a joint family, my mother, my elder brothers family and mine, inherited a house from our dad, who is no more. We recently sold the same @ 26.5 lacs. The plot was bought by my dad in 1993 at 1 lac and we built the house in stages, one in 1999 with a cost of 8 lacs and the other in 2004 with an additional 2 lacs. Also from the money that we got from the sale, it was divided equally among the three of us. Kindly let me know the tax liability in this case. Awaiting your reply as soon as possible.

Thanks and regards,
Athreya

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146 Manish Chauhan July 3, 2010 at 12:25 pm

Athreya

This is complicated enough :) . You should look for CA help on this .

Manish

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147 t m ramani July 25, 2010 at 11:16 am

I accidentally landed on your web-site. I am a retired senior bank executive with 46 years experience. Your service through this web-site is extremely laudable. My best wishes to you
T.M.Ramani
25.07.10

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148 Manish Chauhan July 25, 2010 at 12:41 pm

T m Ramani

Thanks sir , we would need your blessings for future . Keep coming

Manish

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149 Gaurav July 26, 2010 at 1:19 pm

Dear Manish,
Your blog is very informative. I really appreciate your prompt replies to all the queries asked.

I bought a land in 2002 for Rs. 11,00,000 and constructed a residential complex (6 Flats) in 2005 by imjecting Rs.62,00,000. Now, in 2010, I am selling the flats at Rs. 28,00,000 (total for 6 flats Rs.1,68,00,000). The profits will attract Long Term Capital Gains Tax.
1. Now while computing LTCG Tax how do I incorporate the construction cost?
2. Can we calculate LTCG Tax without indexing the purchase value which will attaract only 10% on the difference between the cost price and selling price?

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150 Manish Chauhan July 26, 2010 at 2:17 pm

Gaurav

1) I am not sure on this , you need to involve a CA in this as this is not a general query .
2) 10% is possible , you need to figure out which one turns out to be cheaper for you .

Manish

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151 Pradeep August 1, 2010 at 10:18 pm

Hi Manish,

No doubt, lot many ppl have benefitted from this blog. God Bless U.

My question : I have bought flat costing 18lacs (2 lacs own, 16lacs loan) in 2005, furhter I sold it in March, 2010 in 25lacs. I cleared loan of 16lacs. In between all this, i did not open any Capital gain bank account. Further, i have paid 3+ lacs in few other liabilities like car loan etc. Now, i am remaining with 6lacs.

Please advise, if closing down liability(other loans) will reduce capital gain. Also, as I do not hve any capital gain account, do i need to open it now, or I can utilize my bank statements to justify the transactions.

Thanks in advance. Pradeep.

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152 Manish Chauhan August 2, 2010 at 12:43 pm

Pradeep

which city is this ?

You can offset capital gains of real estate only with few things , like capital loss of real estate , debt funds , gold etc . You cant offset with any kind of loan , Also as you have made the profit in March , you were entitled to pay the tax on that by this year itself , However you should have had opened the Capital Gains tax scheme , Its late now as far as i understand it .

I advice to consult a CA on this, its not a very general query .

Manish

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153 S. Krishnamoorthy August 10, 2010 at 9:44 am

Dear Shri Manish,
In one of your replies, you have stated that indexation benefit is available for the capital gains derived out of sale of equity shares of unlisted private limited co. But our Auditor says that this benefit is not available. Can you kindly explain the correct position?
2. In the case of debt funds, the cost price will be the original amount invested and the sale price will be the redemption amount and the gains or loss is the difference between the two. Capital gains, if any, is to be calculated on the difference amount. Am I correct?
Regards
S. Krishnamoorthy

Reply

154 Manish Chauhan August 10, 2010 at 7:22 pm

1) for unlisted shares long term capital gains will be taxable , but after applying indexation : http://www.taxguru.in/direct-tax-code/capital-gain-taxation-under-dtc-regime.html

2) NO , your cost price will be first indexed , and that will be your real cost price , then difference of your sale price and indexed cost price would be your capital gain .

Manish

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155 S. Krishnamoorthy August 10, 2010 at 9:46 am

Dear Shri Manish,
I have a point to be clarified.
Can the capital gains derived out of sale of equity shares of a private limited company, unlisted, be invested in property for claiming exemption from capital gains tax?
Regards
S. Krishnamoorthy

Reply

156 Manish Chauhan August 10, 2010 at 11:11 am

S. Krishnamoorthy

No , short term and long term capital gains thing does not apply to unlisted shares , you have to add the profit to your salary and pay tax

Manish

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157 Narayanan September 3, 2011 at 5:42 pm

Hi Manish, You are doing a great service by sincerely replying to one and all.
KUDOS.
Can you pls help answer my query as well.
I have just sold my equity shares of a unlisted pvt Co, which I had bought in 1990.
My Qs are
1)Can I invest the capital gains that I recieved in buying new property for claiming exemption in capital gains tax? I was informed by my CA that this can be done
2) If I cannot buy a property with this money what % of capital gain tax I will have to pay . Is there any other method i can reduce my taxes??
Rgds
Narayanan

Reply

158 Manish Chauhan September 5, 2011 at 12:25 pm

Narayanan

1) No you cant .. you will have to apply indexation and then pay tax on the proceeds

2) Appy indexation and pay tax @20%

Manish

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159 Mihir Shah August 19, 2010 at 7:28 pm

Before, I will present to you my case:

I am selling my property today at Rs. 900000/- which was purchased in year 1991-92 for 99000/- (Indexation Cost = Rs. 353,714/-) plus Stamp Duty & Registration Extra. I am buying new property for 2250000 (Agreement value) + Stamp Duty & Registration Charges of Rs. 115000/-, out of which, Rs.2000000/- would be paid from Bank loan and Rs. 360000/- as self contribution.

Now my queries is as follows:

1) Can I claim deduction for brokerage to agent (paid in cash), advertisement in newspapers (paid of cash), transfer fee (in cheque) of Rs. 1000/- paid to the society for my old flat in 1991-92?

2) If i am eligible for the claim no. 1, do I get indexation benefits for the same?

3) Can I claim brokerage to agent for sale of Old Flat and purchase of New Flat as Cost of Purchase of New Flat? Do I have to pay in Cheque only or i can also pay in Cash and take receipt for the same ?

4) I am also going to pay transfer charges for my old Flat too (transfer from my name to new owner name). Can i claim that too ?
What would it be treated as – Cost of Purchase for Old Flat or Cost of Purchase for New Flat ?

Reply

160 Manish Chauhan August 21, 2010 at 3:37 pm

Mihir

I dont think you can claim anything other than Registration value of flat, let me confirm this with some others , they will reply to you on this thread.

Anyone ?

Manish

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161 mohit August 23, 2010 at 2:07 pm

dear manish,

do you please let us know how a private equity will calculate their capital gain tax….as they invest in all kind of iunstrument and in listed and unlisted company, so they basically calculate LTCG. one more thing when they convert debenture to equity share do they need to pay any tax…..if you have any more update relating to the taxation of private equity at the time of exit or conversion of instrument do let me know

Reply

162 Manish Chauhan August 23, 2010 at 2:24 pm

Mohit

What is meant by “Private Equity” ?

Manish

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163 harshwardhan August 25, 2010 at 2:27 pm

hi manish ,
my case is like this :-
-my dad sold his 3 acres of land in 2010.
-he is retired from governmentt services in 2008.
-he received this land from his forefathers. So we dont know in which year our forefathers purchased this land.
– But m sure that the land is purchased around 50-60 years back.
– he sold the land for 45 lacs. (amount on sale deed).
– now i have a flat in my name and to save capital gain tax my dad is purchasing this flat from me.
– i have purchased the flat in may 2009 for 23.5 lacs and my dad is purchasing it from me for 27 lacs.
– now my doubt is :-
1- how much capital gain tax will be saved in this transaction considering indexing , purchasing flat from me. and IS IT A VALID TRANSACTION ?
2- as i am selling this flat to my dad , do i need to pay capital gain tax ?
3 – while doing the sale deed process i need to pay stamp duty and registration charges so will it be CONSIDERED for capital gain tax exemption ? (under COST of ACQUISITION tag)
4 – how much tax will my DAD save in this whole process ?
5 – what would be the optimum purchase price for my DAD considering stamp duty and registration charges , my capital gain tax , capital gain tax ultimately saved for my DAD ?

Reply

164 Manish Chauhan August 25, 2010 at 8:11 pm

harshwardhan

This a too big and complex query to discuss here , You need to consult a tax expert for this .

Manish

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165 Bhuwan August 26, 2010 at 4:27 pm

Hi,

I purchased a flat in 25 Lakhs in 2009. I sold it in 32 Lakhs in 2010. So capital gain is 7 Lakhs. I used this amount to pay off my car and personal loan and this amount is no more in my bank account. It was there just for 1 month only. So tell me how much tax I need to pay on this.

Thanks,
Bhuwan

Reply

166 Manish Chauhan August 26, 2010 at 4:33 pm

Bhuwan

It will be added to your yearly income and taxed at your slab , so if your salary was 6 lacs , add this 7 lacs to that , total is 13 lacs and you have to pay tax on 13 lacs

Manish

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167 kalyan September 6, 2010 at 2:24 pm

Hi Manish,

i am investing in hdfc top 200 (SIP) through hdfc mf online. I hav just started learning about all these things. U have a great blog for educating ppl like us.

My question is how to know am I paying STT or not..?

Thanks for your patience.

Reply

168 Manish Chauhan September 6, 2010 at 4:16 pm

Kalyan

You dont have to worry about STT , as you are not buying direct stocks yourself , That part will be covered by MF , you just dont have to worry on STT :)

Manish

Reply

169 kalyan September 7, 2010 at 11:48 am

Thanks a lot!

Recently I have started few investments and insurance without much knowledge.

I have postponed my further finance decisions for a while (3 months) and I am trying to learn about the products I have opted for and other finance related basics.

Thanks to ppl like you for educating and encouraging us……

Reply

170 Manish Chauhan September 7, 2010 at 12:13 pm

Kalyan

Great to hear that , Planning first , implementation later :) . Keep it up, Keep coming

Manish

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171 Raju Anand September 8, 2010 at 10:08 pm

Hi Manish,
At 27 you know this much congrats and thanx for sharing your knowledge with others.
can you help me to find capital gains on my Deep Discount Bonds, I bought in 1991. Maturing soon.
pl correct me if i am wrong.
Suppose CPI index in 1991 = 200
2011 = 600
Cost of bond 1991 = 4000/-
Sale price of bond 2011 = 50000/-

So now lets calculate capital gains = sale price- indexd cost price of bond

indexed cost price of bond :- 4000*3=12000/-
capital gains:- 50000-12000=38000/-
tax on capital gains 38000*10/100 = 3800/-
So while redeeming my Deep Disscont Bonds the company will pay only
rs 50000-3800 = 46000/- after deducting TDS is it correct?
Pl reply

Reply

172 raju September 8, 2010 at 10:13 pm

Corrrection please.
for
rs 50000-3800 = 46000/- after deducting TDS is it correct?
pl read
rs 50000-3800 = 46200/- after deducting TDS is it correct?

Reply

173 Manish Chauhan September 8, 2010 at 10:34 pm

Raju

I am not sure how it wil work for Deep discount bonds . But the working you did is a general way of calcuating it , so it should be correct , but the percentage you have taken is wrong may be , it should be 20% not 10% , 10% is when you dont apply indexation .

Manish

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174 Raju Anand September 8, 2010 at 11:04 pm

Manish
20% thats cruel.

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175 Manish Chauhan September 9, 2010 at 1:08 am

Raju

Why ? It has been that way since long , Do you want it to be added to your salary and taxed ? I think its better to pay 20% with indexation.

Manish

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176 Manish Bhatt September 25, 2010 at 3:13 pm

Dear Manish,
I purchased a flat @ Rs.1,85,000/- on 28.02.2000 & I recently sold it on 01.04.2010 @ 4,75,000/- What would be my LTCG? and How I can save Tax on that?

Reply

177 Manish Chauhan September 25, 2010 at 4:32 pm

Manish

Thats explained in the post itself , What difficulty are you facing in calculation ?

Manish

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178 Juke October 16, 2010 at 7:28 pm

My total income including capital gains falls in the 10% tax slab.

Do I still have to pay STCG tax @ 15 for short-term trades done on stock exchanges?

or I just have to pay 10%?

Reply

179 Manish Chauhan October 17, 2010 at 11:54 am

Juke

If the capital gains is from shares or equity mutual funds , then it has to be paid at 15% flat , and it does not depend on your slab rate .

Manish

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180 Ram November 7, 2010 at 5:49 pm

Hi Manish,
Thanks for the informative article. In continuation, I have a query,
If a vacant plot purchased in year 2000 for 2 lakhs was sold for 20 lakhs, and using that money another vacant plot was purchased within 6 months–
1. What would be the capital gains tax calculated
2. Will the tax be exempted since the entire proceeds were reinvested in real estate within 2 years?
3. Are there any restrictions on the type of real estate (plot) purchased?
Thanks in Advance,
Ram

Reply

181 Manish Chauhan November 8, 2010 at 11:37 am

Ram

I think the rules of tax exemptions apply on real estate purchase restricted to House , or land on which house is contructed , just a raw land might not be elegible , I am not sure :)

Manish

Reply

182 Sunil Kumar Bhardwaj November 25, 2010 at 10:48 am

Dear Mr Manish Chauhan,
Please let me know if a vacant Residential plot sold by Haryana Govt (huda) is further sold and a Residential Flat is purchased then for the purpose of Calculating Capital gain does Indexation applies or not.

Reply

183 Manish Chauhan November 25, 2010 at 10:53 am

Sunil

I dont think indexation is applied in that case ! . better hire a CA for this

Manish

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184 S.Mohan December 22, 2010 at 10:03 am

My wife had purchased a plot in Chennai in 1983 for about 45oo. She sold the same in December, 2010. She is a coapplicant to the housing loan availed by me and she is also a joint holder of the property. I want to know whether Capital Gains could be avoided by paying the amount of Capital Gains into the housing loan ?

Reply

185 Manish Chauhan December 22, 2010 at 11:21 am

S.mohan

Yes , she can avoid paying the capital tax by investing the profits in the housing loan .

Manish

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186 S.Mohan December 23, 2010 at 10:03 am

Thanks Manish. Your blog is doing a great service to people. I wish all the very best to you in all your endeavours. Keep up the goiod work.

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187 Manish Chauhan December 23, 2010 at 10:25 am

Thanks :)

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188 Sam January 19, 2011 at 4:21 pm

Hi

2 questions:

a) for shares purchased and sold on a US stock exchange – does one get the indexation benefit on long term capital gains? LTCG on such transactions is not tax free
b) if one can claim indexation benefit, then what happens if applying indexation actually results in a loss? For example, if I bought a stock for $5 in 2002 and sold for $6 in 2010, I have made a long term gain of $1 but with indexation it is actually going to be a loss since the purchase price with indexation is actually around $8.3

Any ideas?

Thanks

Reply

189 Manish Chauhan January 19, 2011 at 6:30 pm

Sam

the best place to get the answer would be http://www.jagoinvestor.com/forum/

Manish

Reply

190 Sam January 20, 2011 at 7:02 am

Thanks Manish. I posted it there but I cant find it online under the IT section yet. I presume you review/moderate and then it gets posted under the appropriate forum?

Reply

191 Manish Chauhan January 20, 2011 at 4:42 pm

Sam

I dont think it was there at all .. I hope you created the account and hit “Publish” after asking the question ?

Manish

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192 raju January 21, 2011 at 5:56 pm

Hi Manish,

If my wife(house wife,non working) invests in stock market, mfs with her name,do i need to pay tax on capital gains that she earned.Will that earnings added to my income slab?

Does she need to file IT returns,
if returns in a year are less than1.6Lakh?

Regards,
Raju

Reply

193 Manish Chauhan January 21, 2011 at 5:58 pm

Raju

If the money she is putting is not her own , but given by you , then yes , it should be added to your income (legally) . She does not have to pay any tax if its below 1.9 lacs (note that the exemption limit for women is 1.9 lacs, for men its 1.6)

Manish

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194 Loknath January 24, 2011 at 12:13 am

I hv 1 qsn i hd a property wch i prchd on 1.5.79 fr 3lacs &was destroyed by fire on 3.4.09. &i rcvd 25lacs from insurance co.this year. D mrkt value on 1.4.81 ws 450000. So wt is ltcg? Pls suggest me.

Reply

195 Loknath January 24, 2011 at 12:27 am

Sir. Thr is a qsn that a joint family purchased house on 1.5.85 in bombay for 3.5lacs &sld it on 10.6.04 for 18 lacs. On 17.4.04 it prchd anthr house at hardwar at 4lacs . Pls solve &tel me wht is d income u/h CG. Pls

Reply

196 Manish Chauhan January 24, 2011 at 5:50 pm

Better ask this question at http://www.jagoinvestor.com/forum/

Manish

Reply

197 Loknath February 9, 2011 at 6:44 pm

Thanks

Reply

198 Rajan January 25, 2011 at 10:37 pm

We were a family of four brothers and had an ancestral property. We got into a development agreement with a builder and later a sale deed. According to the agreement we would receive 15 lakhs each and 3 flats each (which we have not received yet since the last two years). For tax calculation purpose, we got the property assessed as it was pre-1981 by a valuer. The value of the land worked out to two crores. My question is about myself. On what amount would the tax be calculated on 15 lakhs I have received or on the 2 crores which is the value of the land as per 1981 assessment? If on 15 lakhs then how much is the tax and under what section? If on 2 crores the tax is calculated then under what section?

Reply

199 Manish Chauhan January 25, 2011 at 10:41 pm

Rajan

This is a more technical question ,better ask it on forum for better responce : http://www.jagoinvestor.com/forum/

Reply

200 Rajan January 25, 2011 at 10:49 pm

We are a family of four brothers and had an ancestral property. We got into a development agreement with a builder and later a sale deed. According to the agreement we would receive 15 lakhs each and 3 flats each (which we have not received yet since the last two years). For tax calculation purpose, we got the property assessed as it was pre-1981 by a valuer. The value of the land worked out to two crores. My question is about myself. On what amount would the tax be calculated on 15 lakhs I have received or on the 2 crores which is the value of the land as per 1981 assessment? If on 15 lakhs then how much is the tax and under what section? If on 2 crores the tax is calculated then under what section?

Reply

201 Ajay Gupta February 9, 2011 at 4:05 pm

Sir,

I bought a commercial shop in Jul.2001 @ Rs. 60,000/-. Now I sold this shop in Feb. 2011 @ Rs. 8,10,000/- (due to circle rates).

If I calculates my LTCG tax with indexation it will be around Rs. 1,46,230/-
20% of (Rs. 8,10,000 – (60,000 x 711 / 426)) + Edu. Cess.
And
if I calculates my LTCG tax without indexation it will be around Rs. 77,250/-
10% of (Rs. 8,10,000 – 60,000)) + Edu. Cess.

Can I pay the IT by the without indexation
Or
LTCG tax with indexation is compulsory.

Please help me to solve this problem.

With lot of thanks

AJAY GUPTA

Reply

202 Manish Chauhan February 9, 2011 at 5:20 pm

Ajay

Yes you can choose the Without indexation option :). So pay only 77250

Manish

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203 Gaurav February 23, 2011 at 6:59 pm

Hello Manish,
I have sold my 6 years old house 4 months back and bought a flat immediately now I wish to sell this flat.

My query is what will be the consequences if I sell the new property within 5 months after I bought it!

Thank you in advance.

Reply

204 Manish Chauhan February 23, 2011 at 8:38 pm

Gaurav

Your capital gains which are saved because of buying this flat would be revered if you sell it before 2 yrs .

Manish

Reply

205 melwyn March 5, 2011 at 2:57 pm

Hi,

Flat purchased in 1995 for 18,00,000
Flat Sold in 2011 for 92,00,000

Indexed purchased price = 18,00,000 * (711/281) = 45,54,448

LTCG = 92,00,000 – 45,54,448 = 46,45,552

Tax with Indexation (20%) = 9,29,110

Tax without Indexation (10%) = 10% * (92,00,000-18,00,000) = 7,40,000

1) Can I pay tax without indexation? Or

2) Invest Capital gains in Capital gain bonds within 6 months.

3) What is the max. limit of investment in CG bonds? Is it 50 lakhs per FY

Please advise.

Thank you.
Melwyn
Mumbai

Reply

206 Manish Chauhan March 5, 2011 at 3:24 pm

Melwyn

Yes you can pay tax without indexation if its lower .

Manish

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207 PARSHURAM March 13, 2011 at 6:23 pm

sir i bought a shop at the cost of rs 28500 in 1995-96..i sold it to another person rs 70000 feb 2011…now i want to calculate it’s capital gain and income tax……sir tell me one thing ..sold price will be calculated what is written in either on RS 70000registred stamp paper or with IT’S DLC COST 231000 OF GOVT RATE

Reply

208 Manish Chauhan March 13, 2011 at 7:08 pm

Parshuram

You first have to calculate indexed cost price as shown in the article , then delete it from the sale price , I can see that you will not have profit due to this .

Manish

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209 PARSHURAM March 13, 2011 at 10:29 pm

sold price is calculated either cost written in article ( registry) or DLC value calculated from which stamps duty is purchased…….please clarify

Reply

210 PARSHURAM March 13, 2011 at 10:32 pm

sold price of a land property is calculated either cost written in article ( registry) or DLC value calculated from which stamps duty is purchased…….please clarify

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211 PARSHURAM March 14, 2011 at 10:23 pm

sir solve my problem….
i purchased shop..at RS 28500 in 1995-96
i sold it to another RS70000 .IN 2010-2011WITH REGISTRY TITLE
the govt value of shop is 231000….as in registry title
please calculate it’s capital gain and tax..
I AM WAITING YOURS ANSWER

Reply

212 Manish Chauhan March 14, 2011 at 11:24 pm

Parsuram

What stops you to use the formula given in the article. Are you confused at some point . You sell price is 70k , your buy price is 28500

Your indexed cost price is 28500 * cost price index in 2010 (find this from internet) / 281

Your selling price is 70K . take the difference .

manish

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213 Hemant March 23, 2011 at 6:13 pm

Dear Sir,
We are two brothers from Tamilnadu and settled in Mumbai. We have an ancestral residential property in our home town in Tamilndau. Total value of the residential property is around Rs.6 lakhs. We have decided to partition that and the elder brother (me) will take the residential property and give Rs.3 lakhs to my younger brother. I (elder brother) have a flat in Delhi and I am planning to sell it for Rs.20 lakhs, which was purchased 9 years before for Rs. 6 lakhs (also spend Rs.1 lakh for its renovation at that time) and move to Tamilnadu and settle in the ancestral house. I have to renovate the ancestral house which costs me around another Rs.6 lakhs. I would like to know if we partition the anscestral residential house ( and register in my name) and I Pay Rs. 3 lakhs to my younger brother and spent Rs.6 lakhs for it renovation, can I claim exemption of capital gain tax (u/s 54) at the extent of Rs.9 lakhs (Rs.3+6) as discussed above. I have no other residential property in my name. My parents are not alive.
If not, if I want to invest in long term infrastructure bond for 5 years, which bonds I have to invest to get exemption and where can I buy that. Whether can I invest in bonds issued by Power Finance corporation, IDFC, etc. to get exemption.

Thanks in advance and best regards,
Hemant

Reply

214 Manish Chauhan March 23, 2011 at 6:39 pm

Hemant

You will be able to claim tax deductions only at the time of selling the property , you are not selling it actually , but giving your brother some amount . So i dont think you can claim it

Manish

Reply

215 Hemant March 25, 2011 at 7:19 pm

Dear Sir,

Thanks for your quick reply. You got confused. I want to sell my flat in Delhi for Rs. 20 lakhs and from that sale proceed I would pay to my brother to acquire the joint family property for Rs 3 lakhs and spent another 6 lakhs for renovotion. So can i claim exemption of LTCG tax of Rs. 9 lakhs from the sale proceeds. This is my question. Thanks and best regards, Hemant

Reply

216 Manish Chauhan March 26, 2011 at 11:04 am

Hemant

IF the sale of your flat in Delhi is after 3 yrs of having the asset , then only you will be able to use those proceeds into paying for another assets . Now you have to see how much is capital gains tax , from that only u can pay for taxes . You can do one thing, you can pay 3 lacs to your brother , but additional 6 lacs will be consired into the cost price of the house, it cant be claimed

Manish

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217 Sandeep Sethi April 23, 2011 at 1:00 pm

Little confusion.

In the topic, just above the line “Let take an Example” , you have written “20% without Indexation and 10% with Indexation” whereas in illustration of example it seems the opposite. 10% without indexation (10% of 1500000.00) and 20% with indexation (20% of 428826.00).

Is it the typing error or may be I have not been able to understand the concept.

Regards
Sandeep Sethi.

Reply

218 Manish Chauhan April 23, 2011 at 1:59 pm

Sandeep

Its typo , thanks for pointing that out ! , i have corrected it

Manish

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219 Janakiraman.V May 5, 2011 at 1:42 pm

Dear Sir,
pls guide me on following :
My wife is having residential house wch she received fm her father as Gift after her marriage. Now for some reasons we are willing to sale that subject house.
House with land is constructed at a cost of 3.0 lacs on 1995
present selling rate is @ 30.0 lacs…

Now my question is how this income from sale of residential house
will be taken for tax calculation for my wife who is house wife without
any other source of income…
is she to file tax returns? pls guide me accdgly…

tks/rgds
Janakiraman

Reply

220 Manish Chauhan May 5, 2011 at 1:56 pm

Janakiraman

yes , she will have to pay the tax as now you first calculate what is the capitla gains , as explained in the aricle . You can reinvest the capital gains in another residential project to save the tax

Manish

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221 vineet May 6, 2011 at 11:03 pm

There a query on behalf of my mother-in-law. There is a house which was transfered in her name on the death of her husband, by mutation, after signing of NOC by other legal heirs. So,
1. does she have to pay capital gains tax?
2. if she sells the property and buys another within 2 years, does she get advantage of the exemption? (i.e. since the property was not originally in her name)

Reply

222 Manish Chauhan May 8, 2011 at 3:16 pm

Vineet

1) NO , its not a “sell” . Its just passing of legacy from one hand to another hand . Once she gets it and then sells it to third party , then all those capital gians things will come up .

2) Yes , even though she gets it recently , the actual buy date would be the original one (husband) . SO she can sell it off and invest in another one within 2 yrs and get exemption

Manish

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223 Sarit May 10, 2011 at 6:03 pm

I am selling my flat at 90 Lacs
Buyer wants to pay 30 Lacs in cash and pay stamp duty only on 60 Lacs.
I don’t have problem in showing the entire 90 Lacs as I am purchasing another property and be investing the whole LTCG of 70 Lacs amount and need n’t pay any tax.

Can I deposit cash received (30 Lacs) in bank and show in my return the sale price of 90 Lacs and let there be 60 Lacs in the sale agreement and be the headache of buyer if he paid less stamp duty.

Reply

224 Amit Jindal May 11, 2011 at 7:59 am

Sarit, I don’t think you can do that. If down the line IT dept. asks for scrutiny of your docs. then they’ll ask for the docs. related to your transaction and ask you to get confirmation from the buyer that he paid you Rs. 90 Lakhs which he won’t give.

In that case the Assessing officer can add Rs. 30 Lakhs to your income and tax that with interest and penalty on that tax.

Reply

225 Sarit May 12, 2011 at 4:31 pm

Dear amit,

Tks. As you may be aware that before sale deed is registered, there is a raw deal on stamp paper where even cash component is mentioned. Though that deal is over once the money is paid and then registered document takes over.
What about this?

Also, practically if one hunts for just white deal, it may be difficult to find the buyer with 100% cheque payment in few cases

Reply

226 RAMESH CHOUHAN May 28, 2011 at 4:24 pm

IF, I HAVE TWO HOUSE. 1st HOUSE PURCHASES IN 2001-02 ON Rs. 500000 AND SOLD IN 2008-09 ON Rs. 800000. HOW WILL BE TAX AMOUNT CALCULATE.

Reply

227 S Surendranath June 8, 2011 at 6:23 pm

I had purchased a plot in 2003 and later did some constructions worth Rs8lacs or so.

How do I calculate the indexed cost and then calculate the amount to be reinvested in real estate .Also should this be invested only in residential property or can it like Studio apartments.

Reply

228 Manish Chauhan June 8, 2011 at 8:12 pm

Surendranath

What is the actual gap between the purchase of plot and the construction , Looks like you need to find a valuer and hire a CA to find the exact tax amount

Manish

Reply

229 surendranath June 13, 2011 at 12:59 pm

Dear Manish,

Thanks.The gap between the plot purchase and construction is about 4 years and is done in phases and could not be completed.Can you pls suggest/help in giving contact details of Valuer and CA.

Reply

230 Manish Chauhan June 13, 2011 at 1:08 pm

Surendranath

I am not sure of your city , Also I dont have personal contact . You need to find it out yourself .

Manish

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231 sanjog gandhi June 12, 2011 at 5:36 pm

Sir,
I recd house( G.F.) by way of will( Gift ) from aunty recently.House constructed in 1978 cost Rs. 40000/- In year 1998 I got FSI right of same house by way of sale deed & constructed First Floor in my name. cost around Rs. 400000/_Now entire house I planned to sold for Rs. 20 lacs.
I purchased new house cost Rs. 18 lacs in May 2010.
Guide me what will be Capital Gain Tax, How I can save
My regular annual income Rs. 7 lacs for which I am filing return & paying I.tax

Reply

232 Manish Chauhan June 12, 2011 at 7:59 pm

Sanjog

your case involves a lot of things starting from will to gift etc without proper pricing information , I think you should take help from a CA on this.

Manish

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233 Sankar Srinivasan June 25, 2011 at 7:36 pm

Sir,

I had purchased an apartment in 2002 for Rs. 20 lacs and I am selling same in July, 2011 for Rs. 84 lacs, could you please let me know how much capital gain tax I need to pay with indexation and without indexation.

Thanks in advance for your valuable reply

Regards,
Sankar Srinivasan

Reply

234 Manish Chauhan June 25, 2011 at 7:45 pm

Sankar

Its clearly mentioned in the article how to calculate it . Cost inflation index is 785 for 2011-2011 and 447 for 2002 . Now just use the formula and tell us also how much is it !

Manish

Reply

235 Sankar Srinivasan July 24, 2011 at 9:56 pm

Hi Manish,

Thanks for providing the information, please find below my calculation

Purchase Cost in 2002 Rs. 2200000
Sale Price in July-2011 Rs. 8200000

Cost of Inflation 2002 447
Cost of Inflation 2011 785
Indexation 1.756152125

Indexed Purchase 3863534.676

LTCG – Indexed 4336465.324

20% of LTCG – Indexed Rs. 867293

Based on the above information, request provide some clarifications as below

1) Since I sold the property in July-2011, I have time till March-2012 to decide to buy another residential property or to pay the tax of Rs. 8,67,293 in month of March-2012 and till March-2012 I could deposit money in FD or in any account of my choice ? Is my understanding correct ?

2) If I decide to purchase residential property before March-2012, the LTCG amount of Rs. 43,36,465 should be deposited in captial gain tax account and same amount need to be utilised for completion of construction before July-2014 ?

2.1) Assuming I have paid the builder Rs. 40,00,000 till July-2014 and If builder does to complete the construction by July-2014 then I need to pay tax of Rs. 8,67,293 as tax before March-2015, is my understanding correct ?

Please request you to provide your valuable answers, so I could plan accordingly.

Thanks in advance.

Regards,
Sankar Srinivasan

Reply

236 Alifiya June 27, 2011 at 4:44 pm

hi Manish,plz tell me hw to calculate the cost inflation index(CPI) for the future years eg. for 2012 -2013,2013-2014 and so on. If i buy property this and want to calculate my capital gain over next few years how can i do it?
thanks a ton
Alifiya.

Reply

237 Manish Chauhan June 27, 2011 at 6:31 pm

Alifya

You dont need to calculate it , its published by govt .

Manish

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238 Raghu June 29, 2011 at 1:17 pm

Hello sirs,

I own a residential plot that I bought for 15 Lacs 16 years back. Today I am getting 85 Lacs for it. The plot is in my name. I plan to sell it and buy a residential flat that is costing me 67 Lacs + registration i.e. about 71 Lacs. I plan to buy the new flat in both me and my wife’s name. I have the following questions:

1 – How much shall be my LTCG? I assume it is NIL since 85 Lacs – 15 Lacs = 70 Lacs which is less than 71 Lacs that I am going to spend towards new flat.
Am I right?

2. Do by any mean my investment in new flat be reduced to half since the new flat shall be in both me and my wife’s name while plot is only in my name? In this case, shall I paying tax on 35 Lacs? What shall be rat of tax if it is true?

regards
Raghu

Reply

239 Manish Chauhan June 29, 2011 at 8:38 pm

Raghu

1. Yes , you will not have to pay any tax on the profit , as your LTCG is less than 70 lacs , infact it will be much less around 30-40 lacs (you have not applied indexation) .

2. No

Manish

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240 Raghu June 30, 2011 at 1:44 pm

Thanks Manish sir,

But I have heard in case of residnetial plot, indexation is not applied and whole sale amount needs to be reinvested. Is it true? Is it whole amount or the LTCG amount only? For example, in my case, Is it 70 Lacs or complete 85 Lacs that needs to be reinvested?

regards,
Raghu

Reply

241 Manish Chauhan June 30, 2011 at 4:03 pm

Raghu

Its not true that indexation is not applicable in case of residential plot . You need to take its market value from valuer on 1981 and that would be your cost price incase the property is older than 1981 . Else take your cost price and just index it .

Manish

Reply

242 Raghu July 1, 2011 at 10:43 am

Thanks

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243 Daryanand July 1, 2011 at 7:11 pm

Dear Manish,

I bought my property in 2003 (on loan of 19 lacs )for 27 lacs and need to sell it in Aug 2011 for abt 1 Cr. I have 15 lacs outstanding on my loan which I will have to pay up now that I am selling. Can I subtract the same from my sale price for LTCG calculation. Also if I have made part payments based on progress while buying. SHould I use the possession date (the last payment) or the date of the agreeement (1st payment for advance) as the year of purchase

Reply

244 Manish Chauhan July 1, 2011 at 8:51 pm

Daryanand

You need to consider the value of house which was in registeration , so was it 27 lacs, If yes then the cost price is 27 lacs , now index that cost and it will increase , subtract it from 1 cr and thats your LTCG .

Manish

Reply

245 Daryanand July 2, 2011 at 10:32 pm

So I take the indexed price of the cost assuming that works to 45 lacs.

So capital gain is 1 Cr-45 lacs = 55 lacs

Now can I subtract the outstanding loan (15 lacs) from this 55 lacs (since I will have to pay that to the bank) Anything else that I can deduct? Like the interest paid to the bank so far on which I have not calimed any tax deductions (since I do not have any income in india for the last 4 years)

Also assuming I reinvest the entire amount in a new flat (to save the tax), can I pay the builder in installments on completion (maybe over next 3 years) or do I have to pay the entire amt out within the 2 years period.

Reply

246 Manish Chauhan July 4, 2011 at 4:59 pm

Daryanand

You will have to pay all the money in start only, other wise people will keep all the money and keep paying from it for 20 yrs, thats not allowed.

In your case the total LTCG would be 55 lacs, nothing to be deducted from it , from tax point of view only LTCG is concerned, not your outstanding loan

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247 daryanand July 5, 2011 at 11:17 am

No i understand that. What I mean is that assuming I have an agreement to pay the builder for a new appartment for the total amount but I release the payments as per the work getting completed with the last payment being made on possession. And assuming this takes more than 2 years. This is the usual case typically it takes 3 years for a building to comeup from booking to complete possession. Will this be allowed.

Also the amount to reinvest, will it be 55 lacs (i.e. the LTCG) or the 1 cr i.e. entire sale amount

Reply

248 Manish Chauhan July 5, 2011 at 11:20 am

Daryanand

the amount exempted would be 55 lacs , not 1 crore . Regarding your main question , now I think a CA would have a better clarity on this .

Manish

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249 javed July 2, 2011 at 12:20 am

hi manish,

Its really great u’ve been solving so many querries so patiently for so long..m sorry to add one more one to you…..my father purchased a land 22ys ago(1989) for rs45000 (but on sale agreement the cost price mentioned is 8000) we sold the land in apr’11 for 40lacs and booked a flat costing us 70 lacs in a developing society (possesion of flat in 2014). We intend to give the developers of the flat 40 lacs within 10 months…..also the flat is booked on me and my father’s name whereas the land we sold was only on my fathers’ name…please tell us if we need to pay any tax on the amount we recieved from selling our land…also we have immediately invested the amount in property…..

Reply

250 Manish Chauhan July 2, 2011 at 2:34 pm

Javed

No , as your profits will be less than 40 lacs and you are anyways putting 40 lacs in new flat , you dont have to pay the tax, but now the issue is if you and your father are contributing amounts ,then your father might be eligible only to claim upto 35 lacs of capital gain , which i think should be ok .

Manish

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251 javed July 2, 2011 at 11:50 pm

thanks manish…just one add on…..my father has one apartment (where we are residing right now) in his name (jointly with my mother), will we have any problem with the second house (concerning the capital gain tax) which we have booked jointly on me and my fathers name (the one mentioned in my above post)..?

Reply

252 Manish Chauhan July 4, 2011 at 5:04 pm

Javed

the only issue here is that your father will have to pay wealth tax on the second property

Manish

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253 MANJUNATH July 4, 2011 at 3:36 pm

We have entered to JV of our property with 63% : 37% ratio with builders. How does the capital gains implication If we get 37% ratio and will invest full amount in getting a site and build residential house for own purpose since presently we dont have any residential house for our own. Do we are eligible for availing exemption under sec 54F. Please clarify

Reply

254 Manish Chauhan July 4, 2011 at 5:18 pm

Manjunath

Thats a little complicated now , I would recommend you to take proper service of some CA

Manish

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255 jai prakash July 7, 2011 at 8:26 pm

please tell me my area is near to municipal area 8 km but population is 3000 only capital gain is applicable or not

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256 Manish Chauhan July 26, 2011 at 11:12 am

Jai

Capital gians will be applicable

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257 premal July 14, 2011 at 11:09 am

Dear Manish,

If I have made some long term capital gains due to sale of shares of an unlisted company. Correct me if I am wrong, the indexation will be applicable for the tax treatment…… My question: Is there any way to save the tax through sec 54ec or otherwise ?

Rgds,
Premal

Reply

258 Manish Chauhan July 14, 2011 at 1:41 pm

Premal

Yes , INdexation would be allowed and you can definately save it by investing it in REC or NHAI bond

Manish

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259 Karthikeyan July 14, 2011 at 6:59 pm

Dear Manish,

Please find the detail of my transaction (sold a flat)
Purchase Price 1500000
Year of Purchase 1993
Sale Price 5500000
Year of Sale 2011
No of Years 18
Purchase CII 244
Sale CII 711
Indexed Purchase Price 4370902
Capital Gain 1129098
Tax with Indexation 225820
Tax without Indexation 400000

If I reinvest 11 lakh, can I avoid paying tax? Do I have to buy a house/flat or can I buy an agricultural land.

Thanks for your time.

Reply

260 Manish Chauhan July 18, 2011 at 5:37 pm

Yea thats correct

Manish

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261 Dr. Maneesh Aggarwal July 22, 2011 at 10:34 am

Hi,
1. Tell me CII for 2011-12.
2. Can LTCG from sale of a Residential plot be used to buy a commercial plot, in order to save tax on LTCG.
3. If the residential plot was bought using a bank loan. Than does the interest paid to the bank add up to the cost price, in order to reduce the LTCG.

Regards

Reply

262 Manish Chauhan July 22, 2011 at 1:45 pm

1. I am afraid its still not come
2. NO , its only allowed for residential plot
3. No

Manish

Reply

263 Aishwarya July 25, 2011 at 11:17 pm

Hi,

We are selling off our family business (private limited company) by way of selling the equity shares (purchased in 2007) held by our family members. Will the profit from the sale attract long term capital gains tax? The clause regarding the exemption of this tax from sale of equity shares is confusing. Hence the question.

Reply

264 Manish Chauhan July 26, 2011 at 10:52 am

Aishwarya

Yes , as those shares are not listed on exachnage, you need to pay long term capital gians ,you will get the benefit of indexation though :)

Manish

Reply

265 Sankar Srinivasan July 26, 2011 at 9:56 am

Hi Manish,

I had sold a residential property this month and following are details of my calculation and based on that I have few clarification, requesting to provide you valuable answers that help me decide for further planning

Purchase Cost in 2002 Rs. 2200000
Sale Price in July-2011 Rs. 8200000

Cost of Inflation 2002 447
Cost of Inflation 2011 785
Indexation 1.756152125

Indexed Purchase 38,63,534.67

LTCG – Indexed 43,36,465.324

20% of LTCG – Indexed Rs. 8,67,293

Based on the above information, request provide some clarifications as below

1) Since I sold the property in July-2011, I have time till March-2012 to decide to buy another residential property or to pay the tax of Rs. 8,67,293 in month of March-2012 and till March-2012 I could deposit entire money (Rs. 82, 00000) money I gained in the sale of apartment either in FD or in any account of my choice ? Is my understanding correct ?

2) If I decide to purchase residential property before March-2012, the LTCG amount of Rs. 43,36,465 should be deposited in captial gain tax account and same amount need to be utilised for completion of construction before July-2014 ?

2.1) Assuming I have paid the builder Rs. 40,00,000 till July-2014 and If builder does to complete the construction by July-2014 then I need to pay tax of Rs. 8,67,293 as tax before March-2015, is my understanding correct ?

Please request you to provide your valuable answers, so I could plan accordingly.

Thanks in advance.

Regards,
Sankar Srinivasan

Reply

266 Manish Chauhan July 26, 2011 at 10:49 am

Sankar

yes, your understanding is correct .

Regarding the last point , I suggest you take advice from a CA also , as this involves 40 lacs of rupees, i dont think you should shy away from hiring a CA , you will save much more than what you invest in CA consultancy :)

Manish

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267 Pavan Mohan G July 28, 2011 at 12:11 pm

Hi,
I have some doubts about Tax on capital gains on Shares and securiteis.
Q1. How i can know whether it is STCG or LTCG in case of shares and securities and other properties (Land, Flat, etc)?
Q2. If i sell shares after 1 year from purchase, will there be any tax on capital gains? if so, How much? and same if i sell before one year.?
Q3. What is meant by Tax befor indexation and after indexation? Can we opt for the option based on which tax will be lower?

Reply

268 Manish Chauhan July 29, 2011 at 11:44 am

Pavan

1. In shares if you sell it before 1 yrs then its short term , else its long term

2. There wont be any tax

3. http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html

Manish

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269 Sharad Kapadia July 31, 2011 at 5:15 am

An organisation owned property (bought before 1981, was sold in April 2011. What should be the calculated Capital Gain for sale of real estate? It is not a Trust but IT returns were filed as deemed trust and exemption due to the trusts is allowed by IT officer.
While the price of this property has not increased in comparable increase in the price of gold, i.e. real value of Rupee has depreciated more than the indexation, are we logically entitled to claim on the grounds of real value rather than the IT Act provision?
We are also going to purchase land from the sale proceeds of old property.
Thanks.

Reply

270 Manish Chauhan August 4, 2011 at 6:23 pm

Sharad

the workings will be same as the law for real estate .. no exception

Reply

271 Pavan Mohan G July 31, 2011 at 3:00 pm

Hi Manish,

We have sold an Ancestoral property ( Site) in Bangalore . To avoid Capital Gain tax we are planning to buy another property . But the doubt is , which type of property should i look for. My options are :
1. To buy a built house
2. Agricultural Lands
3. One property where in there is a big shop in ground floor and House in first floor

Can i use any of these options to avoid capital gain tax as i am not interested in buying any bonds like REC as the interest is only 6%.
I am more interested in option 3 as mentioned above. but i dont know wheather its considered as commercial or residential property.

Need ur suggestions .
Thanks
Pavan

Reply

272 Manish Chauhan August 1, 2011 at 8:24 pm

Pavan

I think you can make the house on the land and it will be considered as residential only . leave the ground floor like that for some time , later use it commercially , a good idea would come from a CA

Manish

Reply

273 akhilesh August 1, 2011 at 2:09 pm

hi, manish
my name is akhilesh..main govt. employ hun..and my salary is 15000 permonth.
my question is…maine 500000 property me invest kiya tha before 8 to 9 month..and that time the property value riched 1000000..so m responsible for capital gain tax..to main ye janana chahta hun ki main apna capital gain tax kaise save kr skta hun..aur jb main 10% tax slab me aajaunga to kya tb b main propety sell krunga to mughe income tax ke alawa cgpt tax bhi dena hoga..???

Reply

274 Manish Chauhan August 1, 2011 at 8:08 pm

Akhilesh

Tax on property is given only at the time of selling , there is only single tax given on anything , not double , LTCG is called only when the profits/loss are after 3 yrs

Manish

Reply

275 akhilesh August 2, 2011 at 9:57 am

thanks manish..

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276 akhilesh August 6, 2011 at 2:53 pm

hi, manish…i want to know..ki ek govt. employ agr investment krke big amount bana leta hai aur sare tax bhi time to time pay krta hai…to future me use koi problem to nahi hoga…??

Reply

277 Manish Chauhan August 6, 2011 at 10:21 pm

Akshilesh

Nahi , what problem ? Koi problem kyun hoga ?

Reply

278 S Karuna August 2, 2011 at 11:38 am

I undersand that the procedure for investment in residential property to save capital gains tax gains after selling a property is not available in case one is already having two residences already.Pls clarify on this.

Also pls inform whether investment in Studio apartments qualifies for savings on capital gains tax.

Thanks

Reply

279 Manish Chauhan August 4, 2011 at 5:08 pm

S Karuna

I dont think so that the rule you mentioned is correct . Where did you read that if a person has 2 properties than he cant save tax by reinvesing profits from real estate ?

Reply

280 Rama August 4, 2011 at 9:58 am

Hi Manish,

I have a flat in Bangalore for which interior is done by me in 2008. The property was book in Sep’2005 and registered in Mar’08. I started living in it from Jun’08. I have paid builder X amount for the basic flat, Y amount towards depost of BESCOM (electricity) and BWSSB (water and sweage), Z amount towards alteration and XX towards interiors.

How do I calculate my Long term capital gains?
Can I claim deduction towards my Y, Z and XX amount as an improvements?

Reply

281 Manish Chauhan August 4, 2011 at 10:52 am

Rama

It would be your registeration amount which will be taken as Buy price

Manish

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282 Rama August 4, 2011 at 11:32 am

The registration amount is X + Z only.

How do i manage the interior amount? Say I spent 10L for the interior whose present value is 6L. Can I show 4L as a loss ?

Reply

283 Manish Chauhan August 4, 2011 at 11:45 am

Rama

I think you need to involve a CA or a valuaer for this .

Manish

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284 Manish Chauhan August 4, 2011 at 1:38 pm

Rama

You cant show interiors like that .. Better talk to CA on this , if it involves lacs of rupees , better spend some thousands on this and save more

manish

Reply

285 thomas paul August 30, 2011 at 11:01 pm

Hi Manish

I read you article on Capital Gain tax ( http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html ) , it was very interesting. However i am failing to understand few thing

we purchased a house in 1993 for Rs 5 55 000 and we sold it in 2011 for Rs 13 00 000, can you tell me how how much Capital gains tax is incurred on this , the reason i am asking you is cause we want to invest this amount in in some secured debentures which gives 11% or FD which gives 10 %. instead of capital gain bond ( which give only 6 % ) .

Reply

286 Manish Chauhan August 31, 2011 at 10:24 am

Thomas

I have a good news for you … You dont have to pay any tax , and on top of it , you can actually show some loss ! . Let me show you why

the CPI for 2011 is 785 and CPI for 1993 is 244 . Which means your Indexed Cost of House = 550000 * 785/244 , which is 17.5 lacs approx .. So your COST is bigger than SELL Price .. and hence you made a LOSS of 4.5 lacs . This is long term capital loss , you dont have to pay any tax on the money you got by selling the house . Infact if you have some other long term capital gains , you can adjust 4.5 lacs loss from it .

Manish

Reply

287 Sanjeev Kumar August 31, 2011 at 9:30 pm

Hello Manish,

My mother is a senior citizen. She recently sold 8 acres of inherited agricultural land. The market value of the land in 1981 was approximately 75,000 Rs per acre. Land was sold in July 2011 at a price of 7,50,000 per acre.

1) Is there any long term capital gain she has to pay?
2) She does not have any other income. If there is no capital gain to pay on the land, does she still has to notify or fill the income tax forms?

Thanks.
Sanjeev

Reply

288 Manish Chauhan September 1, 2011 at 1:47 pm

Sanjeev

1. Yes there will be long term capital gains tax just like any other real estate property . You can calculate it just like the article mentions
2. Income tax is given on the income for the year , if she does not have regular income, it does not matter , she got income in this year .. so she pays tax .

But there is one good point ,she can save tax by investing the capital gains in another “Agricultural land”

Manish

Reply

289 Sanjeev Kumar September 2, 2011 at 6:46 pm

Hello Manish,

Thanks for your quick response.

After calculation, I found out that my mother made a long term capital loss on sale of her agriculture land. Also, she does not have any other income as well. My follow-up question is: does she still has to notify the income tax office about the property sale OR need to fill any forms?

Thanks again for your help.
Sanjeev

Reply

290 Manish Chauhan September 3, 2011 at 10:29 am

Sanjeev

No she does not , but she should . because only then you will be able to carry forward the capital loss and adjust it with profits later upto 8 yrs .

Manish

Reply

291 vasudev September 9, 2011 at 11:49 am

Hi

I have purchased a property in 2001 and sold in 2009 and there is no capital gain on the property. while filing the incometax return this was not shown as there is no capital gain. now my question is that is it mandatory that this transaction is to be shown in filing of incometax return.

vasudev

Reply

292 harman singh September 19, 2011 at 11:30 pm

Hello Manish,

I have few questions that i did like to ask and it will be very helpful if you could answer the same.
1) i have recently sold off agricultural land that i had inherited through many generations. Due to fast growing townships the land is just outside the muncipal limits (within 8 km outside mucipal limits). I am able to calculate the capital gain but my question is what type of property can i buy and since on a part of a land there was a marriage palace can i count in the money that i had invested to develop the palace to be deducted from capital gain.
2) Also the money apart from capital gains will be counted as income for that year?

Thanks a lot as your article was immmensely helpful !!! Cheers mate and keep up the good work

Reply

293 Manish Chauhan September 22, 2011 at 9:29 pm

Harman

1. You dont have to pay the tax if its marked as “Agricultural Land” . also when you sell it , you can save tax on the capital gains only if you invest in another “agri land” .. \

2. Any thing other than capital gains , will be assumed to be your income .

Manish

Reply

294 samir September 25, 2011 at 4:59 pm

Hi,
For New Flat
First Payment Date : 17/04/2010 : Rs. 1000000
Last Down Pymant Date : 30/11/2010 : Rs. 0010000
Last Loan Payment Date : 08/02/2011 : Rs. 1100000
—————————————————–
Total : Rs. 2200000

Total Downpayment : Rs. 1100000
Total Home Loan : Rs. 1100000

Stamp Duty / Registration : 21/04/2010 : Rs. 130000
Home Loan Mortage : 29/08/2010 : Rs. 020000

Sold 2 Properties :
Flat 1 : 12/12/2010 : Rs. 1150000 (Capital Gain Tax Rs. 100000 Bonds Purchased)
Flat 2 : 20/08/2011 : Rs. 2100000 (Capital Gain Tax Rs. 500000 After Home Loan Closure Rs. 500000)
—————————————————–
Total : Rs. 3250000

May I Make Downpayment Rs. 500000 so that no need to pay Long Term Gain Tax OR No Need To Buy Bonds ?

Reply

295 Manish Chauhan September 29, 2011 at 10:05 am

Samir

Yes …

Reply

296 Pooja Kadakia October 7, 2011 at 10:07 pm

Hi,

I have a question regarding capital gains from arts and antiques, are the tax slab the same for LTCG and STCG in this case as well.

What are the deductions available for investment in arts and antiques.

Reply

297 Manish Chauhan October 8, 2011 at 11:53 am

Pooja

the taxation will be in same manner as in debt funds .. before 3 yrs it will be added to income and after that indexation will apply

Reply

298 vilas October 24, 2011 at 11:43 am

Sir,
I have two questions regarding capital gains tax on sale of house property :
(1) Purchase price Rs. 3,81,000/- in 1991 – sale price Rs. 500000/- in fy 2010-11. how to calculate cg tax?
(2)Purchase price/cost Rs. 40000/- approx. in 1961. sale price Rs.2700000/- in fy 2011-12. how to calculate cg tax?
Thanks in advance.

Reply

299 Manish Chauhan October 24, 2011 at 12:30 pm

Vilas

1. in this case , its exactly same as explained in the article

2. In this case you need to take the house value as per year 1981 , you will require a “valuaer” in this case .

Manish

Reply

300 Sirish October 27, 2011 at 2:11 am

Hello Manish,

Thanks for excellent information.

I have a simple remaining question. How do I know the “year” I purchased a society flat purchased in installments. First installment of Rs 1.25 lakh was paid in 2003 and after yearly installments, final one was paid to society in 2008 when I got possession. Total cost paid over the years was Rs 14 Lakhs. Which year do I use for cost basis for indexation and to calculate whether I pay Short Term or Long Term capital gains tax. If I sold the flat with in one year of taking possession, do I pay Short Term capital gains tax even though technically I made payments (and owned shares in society) since 2003.

Thanks. Sirish

Reply

301 Manish Chauhan October 27, 2011 at 12:51 pm

Sirish

Its not the actual value you paid ,its the amount with which you made it registered legally .. so look at the amount on which you paid stamp duty

Manish

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302 Paras November 4, 2011 at 5:21 pm

Sirish, I think it would be the year in which the flat got registered/got the possesion irrespective of the year of booking the flat. So 2008 should be used for cost basis indexation. So you if you sell the flat in 2009, it should be Short term CG. Still visit some CA to get the clarification.

Thanks!
Paras

Reply

303 Paras November 3, 2011 at 4:02 pm

I have a flat which I am about to sell and expect to get Capital gains on it. It would be a long term Capital Gain as the property has been held for more than 36 months by me. My question is, if I can get a tax exemption on the capital gain in the following case:
I booked another property (under construction) 30 months back and I have not yet received its possesion nor its registry is yet done. Some amount is due to be paid to the builder at the time of possesion and the registry amount. If I utilize the above money earned in Capital gain, then am I eligible to get the tax exemption even if the property was booked 30 months back?

Reply

304 Manish Chauhan November 5, 2011 at 1:12 pm

Paras

you yourself replied to Sirish the same kind of thing . what mattes is the LEGAL document date , no matter when you booked it , if you register the property on date X , then date X becomes you buy date .. so see how much tenure is between buying date and selling date. only then you can find out if its short term or long term capital gains

Manish

Reply

305 susanta November 14, 2011 at 9:46 pm

I have purchased a residential plot in the month of Jan 1996 with a cost of Rs. 45,000/-. I construct a boundary wall with a cost of Rs. 25,000 in June 1996 (but no expenditure proof is available at this time). I intend to sale this plot for an amount of Rs. 16,75,000/- in Nov 2011. My questions are :-
(a) How much I have pay tax for capital gain
(b) How to save tax against capital gain
(c) Where to invest the money so that i can save tax
(d) How to calculate the tax. can you e-mail me

Reply

306 Manish Chauhan November 16, 2011 at 12:21 am

Susanta

a) Depends on the cost price of the land and it would be the amount equal to registry amount ,also you need to index the cost .

b) Yes , if you invest the money in another real estate within 2 yrs

c) Same as b

d) Search the net or meet a CA

Manish

Reply

307 ramesh iyas November 20, 2011 at 4:29 pm

gr8 work manish.

Reply

308 Manish Chauhan November 20, 2011 at 5:31 pm

Ramesh

Thannks

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309 A K Mishra November 22, 2011 at 1:58 pm

can the existing housing loan availed in April 2010 be adjusted by my capital gain S/B account maintained in the same Bank Branch?
Limit Sanctioned by Bank Rs. 1600000.00
Date of sanction April 2010
Amount availed till date Rs.650000.00
Construction is continue
Possession expected in Dec 2013

Reply

310 Manish Chauhan November 23, 2011 at 2:15 pm

AK mishra

What do you mean by adjusted ?

Manish

Reply

311 Manish B November 27, 2011 at 4:49 pm

Great article Manish. Still have a query. Is there a difference in computation if I sell my apartment within a 3 year period? I hear people talk of a 3 year period for applicability of CGT benefits…again is it 3 yrs from possession date or purchase/ agreement date? I purchased in June 2008 and took possession in June 2010. I plan to sell now…

Reply

312 Manish Chauhan November 29, 2011 at 2:01 pm

Manish

It would be date of purchsing mentioned in the sale agreement (registration)

Manish

Reply

313 Krishna November 29, 2011 at 5:11 pm

Good day Manish Chauhan,

My query is the same as comment # 28. How is indexation treated for residential house purchased before 1981-82?

House purchased in 1951 for Rs. 16,000/-
Transferred to my Father by Will on 1956
Sold by my Father in Oct 2011 for Rs. 95,00,000/-

Please clarify. Thanks.

Reply

314 Manish Chauhan November 30, 2011 at 9:00 am

Krishna

In that case the value of the house on 1981 as per municipality (hire a VALUER) , will be treated and your buy date will be treated as 1981 . then do the numbers

Manish

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315 shashank kapshikar December 6, 2011 at 11:10 pm

i have purchase aflat in march 2011 and want to sell in december 2011 or jan 2012. oteother than builders cost i have incurred expenditure on REGISTRATION, STAMP DUTY VAT AND SERVICE TAX , FOR COMPUTATION OF PROFIT(capital gain ) WHAT WOULD BE COST OF FLAT, IT IS EITHER ONLY BUILDER’S COST OR OTHER EXPENDITURE WILL ALSO BE CONSIDERED. waiting for reply thanks.

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316 Manish Chauhan December 7, 2011 at 1:13 pm

Shashank

Note that in your case there will not be any LONG TERM CAPITAL GAIN , all you need to do is SELLING PRICE – COST PRICE , where SELLING price is the price at hwich you sold and the cost price would be builders cost + registration cost + stamp duty . what ever is your profit will be added to your income and taxed at your tax slab rate . this is because indexation is applicable only after 3 yrs

Manish

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317 Prabhat Sikdar December 11, 2011 at 12:27 pm

Hi Manish

I want to know if NRE’s can apply in FMP’s and after the FMP’s mature will the proceeds be credited in NRE account. Also if there is any tax applicable after 365 days which means of long term capital gain.

Also kindly let me know if E- Silver sold after 4 years attracts tax, if so will it be after indexation.

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318 Manish Chauhan December 11, 2011 at 12:44 pm

Prabhat

Note that FMP’s are mutual funds and as per the law , NRI’s can invest in MF’s from any kind of account and the proceeds will be paid back in that same account .

Manish

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319 Prabhat Sikdar December 11, 2011 at 2:29 pm

Manish
Many thanks for the information.

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320 Prabhat Sikdar December 11, 2011 at 12:28 pm

Manish

Any good FMP’s in market now for NRE investors

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321 Manish Chauhan December 11, 2011 at 12:41 pm

Prabhat

You will have to search on net for new FMP! . We dont update that

Manish

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322 Prabhat Sikdar December 11, 2011 at 2:30 pm

Thanks

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323 Sridhar December 19, 2011 at 10:17 am

Hi

I am still confused whether Capital Gains tax on a Property (House, Land, Comm Property) can be paid considering lowest of the two i.e. with indexing(20%) and without indexing options(10%).
Typically when there is huge appreication, paying 20% tax with indexing will always be higher than paying 10% tax without indexing. So without indexing would be the way to go.

But I am unable to find a link to the tax section which explicitly states that we can choose among the 2 options.

Can you pls put the link here, where it says the above.

Also i checked with 2 tax advisors (not sure of the repute) , and they said 10% is not correct, we have to pay 20% on indexed cost, if its a sale of real estate after 36 months of aquisition.

Could you pls clarify

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324 Manish Chauhan December 19, 2011 at 11:24 am

Sridhar

I am not sure of the link , but you can take that on rocks .. you can claim the minimum of the two , many people are doing that its mentioned on TV shows many times .

Manish

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325 Sudeep Jain December 23, 2011 at 1:21 pm

Hi,

Suppose I have bought a flat @ 25L via Home Loan. For 3 years I have paid home loan interest i.e. 5L (via EMI). After these 3 years the flat cost @ 40L. Now I would like to sell this flat so while calculating the Purchase price can I consider the home loan interest (5L) as well i.e. Flat Purchase Price (25L) + Home Loan Interest (5L) = 30L, because I see home loan interest as a loss on property. Will I get this as a benefit/rebate in tax calculation?

Thanks
Sudeep Jain

Reply

326 Paras December 23, 2011 at 2:36 pm

Sudeep, 5L cannot be considered to include in the cost while calculating it for the Capital Gains purpose. Obviously, its a loss on house property, but this deduction has already been taken u/s 24(b) for which the limit is 1.5L for self occupied and no limit for a rented property. You cannot claim benefit twice on the same loss.

Thanks
Paras

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327 Sudeep Jain December 23, 2011 at 5:36 pm

Thanks Paras, you have a valid point.

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328 ram December 28, 2011 at 3:10 am

What is the date of purchase of the real estate property? Is it date when the agreement is signed between the builder and the purchaser or the date when property is registered at the registration office? Are short term and long term capital gains rules are same for Resident Indians and Non Resident Indians/ Persons of Indian Origin Card Holders (PIOs)?

Reply

329 Manish Chauhan December 28, 2011 at 9:44 am

Ram

The purchase date will be considered as the registration date … and everything is same for resident/NRI/PIO

Manish

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330 ram December 28, 2011 at 2:39 pm

Thank you, Manish for the information.

Will it be possible to get IT regulation on this?

Kind regards,

Shashi

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331 Manish Chauhan December 28, 2011 at 9:56 pm

Ram

What you do mean ? I didnt understand what you actually want ?

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332 ram December 30, 2011 at 4:38 am

You are saying purchase date would be considered ‘Registration Date”. I am asking Income Tax Regulation/Section to that effect if you can quote to back up your swtatement. The Tax Court in India has found the purchase date when the agreement is made. Please refer to

http://www.indianrealestateforum.com/gurgaon/t-long-term-capital-gain-calculation-property-14953-page2.html

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333 Manish Chauhan December 30, 2011 at 6:40 pm

Ram

Thanks for that link .. There is more confusion when I read it as there can be different rules depending on what kind of property and when you bought it , I strongly feel you should talk to a tax consultant

Manish

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334 harry December 29, 2011 at 8:15 pm

Hi i wanted to ask something diff from the topic above. I have sold my ancestral property and the registry amount is X which is same as the govt records for that area( so no capital gain). If i keep that amount and do not buy land for it then it will be considered as my annual income but if i buy the NHAI bonds issued on dec 28 then do i still have to pay the tax on the X amount ? or the tax will be exempted on the X amount since i have invested in these bonds ? Thanks in advance !!

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335 Manish Chauhan December 30, 2011 at 7:06 pm

Harry

Note that these bonds are not going to give you any tax benefit . these are not those NHAI bonds which give you capital gains exemption rules , those are different bonds from NHAI .

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336 Sujitkumar January 5, 2012 at 3:11 pm

Hello Manish,
I would like to know about the capital gain and the tax i have to pay if any. I booked 1 2BHK under construction apartment on 1st Dec 2007 and got the allotment letter. Then we registered the agreement on 21st Dec 2007. After registration I paid FULL balance amount by loan in Jan 2008. I got the possession of the same property in May 2010. Now in Jan 2012, I am planning to sell the apartment and would like to know the capital gain after sell will be considered as Short term Capital Gain OR Long Term Capital Gain? Do I have to pay any income tax?, if I reinvest the full capital gain immediately to buy the new apartment for my own stay?
2nd related question is, how the Period of Holding is calculated, is it from date of Registration or from date of actual possesion.

Please advise and thanking you in advance.
Regards,
Sujit

Reply

337 Manish Chauhan January 7, 2012 at 1:47 pm

Sujit

Look at this : http://www.indianrealestateforum.com/gurgaon/t-long-term-capital-gain-calculation-property-14953-page2.html

The holding period is from the date of allotment .. so you will have to pay long term capital gains .. but if you invest that money in next 2 yrs . you will not have to pay that

Manish

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338 PANNA KAPADIA January 6, 2012 at 9:47 pm

Nice way of explaining.

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339 Manish Chauhan January 7, 2012 at 12:20 pm

Thanks Panna

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340 Sunil Kumar January 15, 2012 at 10:41 pm

Hi Manish
I am working in the MNC in India. Company has given the option of ESPP. I am purchasing the company stocks from last 4 years. These stocks are purchased in USA market. Now i wanted to sell out my stocks. I wanted to know the following things:-

1. Is Shares purchased 1 year back should be considered as long term or not? Is there any tax involved on it.
a. Is this is considered as long term capital gain?
b. Is this long term capital gain can be used to purchase a house to offset the
income tax?
c. These stocks are purchased in every quarter (3 month). Some quarters are
having profit and some having loss. How to calculate the amount to
investment for house to offset tax.

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341 Achal Malhotra January 22, 2012 at 8:53 pm

Excellent blog for lay-persons.
My question: I acquired a flat in a Group Housing Society for Rs 10 lacs; sold it in Dec 2011 for Rs 67 lacs and within a week purchased a PLOT of Land for Rs 98 lacs . Am I required to pay ant LTCG tax?
Also I plan to dispose of another flat and propose to use bulk of the sale proceeds for constructing a house on the plot of land purchsed > What impact, if any, will the second transaction have on the first transaction?
Thanks in anticipation. Achal

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342 Himanshu Goel January 23, 2012 at 3:40 pm

Capital gain tax is exempted in following cases:

1.If the proceeds from sale of a property are invested back in property within 3 yrs of the sale which stands true in your case.Hence no LTCG on your first property.

2.Now about your second plan, the capital gain arising from second sale have to be utilized for construction of the new house within three years from the date of transfer of the second property.

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343 Manish Chauhan January 24, 2012 at 12:58 pm

Achal

No you dont have to pay any long term capital gains tax, if you had hold the first house for atleast 3 yrs ..

Now coming to your question, as you are planning to make two houses (one by purchase , which you already did and second one by constructing it) , I think what you can do is claim the deducations on first house and enjoy the unlimited interest deductions on second house , assuming you took home loan for that

Manish

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344 K. Singh January 24, 2012 at 2:34 pm

Dear,

I have a residential house purchased in 1975 by my deceased father. My mother is living with me. Please advise if my mother sell the property and gift me the sale proceeds and if I can purchase another residential property or construct a house from the sale proceeds gifted by mother to avoid LTCG.

Furthermore, if my mother will the property in my name, can I use the sale proceeds of the property to purchase another residential property or construct a house from the sale proceeds to avoid LTCG.

I would appreciate your reply.

Regards
K. Singh

Reply

345 Manish Chauhan January 24, 2012 at 2:38 pm

K singh

Right now , who is the owner of the house , is it your mother (as per WILL) , else you both are the owners . You can sell it off and use the proceeds to buy another house .. there will be no LTCG

Manish

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346 Sunita January 29, 2012 at 6:26 pm

Dear Sir,
I am govt. employee.My salary is 30,000 p.m i.e.3 Lakhs 60 thousand p.a.
In jan,2010 I bought a flat @ 6 lakhs (5 lakhs from HDFC and 1 lakh from personal saving).Now I sold the flat in Jan 2012 @ 9 Lakhs.I have used these 9
lakhs in repayment of home loan i.e 5 lakhs and rest of the 4 lakhs used in buying the new flat. which i have bought @ 17,50,000 in the next week of selling the first flat.Rest of 13,50,000 arranged from HDFC bank.Now, If i am taking my salary as income then I will have to pay no tax for current financial year as i have invested One lakhs in LIC and bonds etc and payed the home loan interest. But Now after reading your discussion I understand that I will have to pay STCG.
Now,please help me for following questions:
1) What will be my total income for tax.Is it including my salary and profitable amount both from selling the flat or only the profitable amount from selling the flat?
2)What will be my taxable income and taxable slab or %(percentage) for paying the tax?
3) Approx how much tax I will have to pay for current financial year?
Please help me. Thanking you in advance.
Thanks,
Sunita.

Reply

347 Manish Chauhan January 31, 2012 at 4:43 pm

Sunita

1. Your salary + profits from house selling

2. that depends on the income only .. upto 5 lacs it wouldbe 10% , 8 lacs 20% and above is 30%

3. same as 2

Manish

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348 vallari March 3, 2012 at 9:49 am

are the registry charges included in the cost of property?

the property was in the name of my parents and after their death my siblings made the gift registry of the same in my name will these registry charges be also included in cost of property

Reply

349 Manish Chauhan March 3, 2012 at 10:16 am

Vallari

Yes . Registration charges will form the part of the cost of the house

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350 arun madan March 3, 2012 at 10:45 pm

My father bought a flat in 1974 for Rs 44000.If he now sells it for Rs One Crore Thirty Lakhs ,what will be the LTCG tax.There is no CPI available for 1974-75
2. Should he pay tax with indexation or without indexation
3. He is 97 Years old

Thanks

Reply

351 Manish Chauhan March 5, 2012 at 3:44 pm

Arun

IN that case you will have to appoint a valuer who will find out the cost of the property on 1981 and then that will be the base price . Also the tax will definately will be there , but that can be avoided by investing in a new property !

Manish

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352 DEEPAK March 13, 2012 at 6:57 pm

Hello Manish,
I would like to know about the capital gain and the tax i have to pay, if any. I booked one 3BHK in a new builder project under construction linked plan in 2008 and due to undelivered status of the project, sold the same in December, 2011 on the same price which paid by me till December, 2011 (37 Lacs). So, no registration happened but only payments gone through Construction Linked Plan. Now. with this 37 lacs, bought a new apartment (also construction linked plan) for 41.60 Lacs. The possession will be offered in December, 2012. Do I have to pay any income tax since I have already reinvested the whole amount (plus along with my other savings of 4.60 Lacs)?,
Thanks in advance
Regards,
Deepak

Reply

353 Manish Chauhan March 13, 2012 at 9:45 pm

Deepak

As registration was not done , offically there was no house buying at all .. Right ? In that case it becomes a little difficult to guide on the exact status

Manish

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354 Naresh March 13, 2012 at 11:52 pm

Hi Manish
Thanks for all the info you posted.
We booked an apartment in 2006, got possession in 2012 and if we sell in 2012, I have following questions-
1. is it long term or short term gain?
2. how to calculate the indexing costs for the amount paid from 2006 in installments?
Thanks / Naresh

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355 MEHUL March 14, 2012 at 10:19 am

Dear Manish,

I have gone through this whole forum for the first time today. Remarkable experience…. with all the new queries posted each day. God bless you. Keep up the good work.

Now, my small query to you…. I have purchased an apartment (under construction) this month with a price tag of 40 Lacs and the possession is going to be likely in Q3 2012 (around September). Now moving on to next FY in June 12 I probably may sell the property and will get around 60 Lacs price. Please let me know how much I would pay STCG. Is it going to be indexed or without index. What is the difference between two in short term. If in case, with 60 Lacs amount, I would go for another under construction linked plan apartment within a month of selling, then will I be able to save total tax on my capital gains. Please provide some best practices in order to avoid maximum tax on capital gains in short term.

Also, I heard that I also need to pay the advance tax in the month of June itself once property sold otherwise the remaining months will be charged @1% interest. Kindly also put some light on it.
Mehul.

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356 Rajesh March 14, 2012 at 4:37 pm

I had purchaged house in 2003 at Rs 4,80,000/-. Now in 2011 January,I have purchased one more house for Rs 22,00,000/-.But I paid only booking amount of Rs 3,00,000/-in 2001 January.The registration for the new house will be done in 2012 May. I would like to sell my old house property in July’2012 for around Rs 17,00,000/-. Can you please help me to know whether the tax on capital gains by selling old property can be exempted by purchaging my new property.

Reply

357 Manish Chauhan March 15, 2012 at 3:44 pm

Yes Rajesh

You can buy the new house with the amount you get from your old house. No tax :)

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358 Rajesh March 17, 2012 at 7:11 pm

Thank you Manish,

Your reply in this regard is verymuch appreciated.
Now can you help me know some more queries regarding the new transections?

I will sell my existing property in July’12.The amount I ‘m going to receive Rs 17,00,000/-.
For new property(Total Rs 21,00,000/- including stamp duty),I have booked in 2011 Jan and booking amount of Rs 3,00,000/- is already paid to tyhe builder. And registration of the new property will be done in May 2012. Can you please answer following queries:
1) Should I deposite the amount in a perticulat bank account and the checked to be given to builder as and when required as per construction stage?
2) To get the tax rebate, when I should complete the payment to the builder for the new property?

Regards,

Reply

359 Manish Chauhan March 18, 2012 at 11:59 am

Rajesh

These questions are better taken by a lawyer , he will be able to optimize it . Note that when these kind of numbers of involved , better spend few thousands and take an expert help on this. You will save more money than you pay for this.

Manish

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360 Rajesh March 19, 2012 at 12:42 pm

Dear Manish ,
Thanks a lot,

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361 Vijay March 22, 2012 at 8:55 am

We have purchased 500 shares at very low rate in between 1978-1993. The company is delisted now with price of 4000 each. (Reverse Book Building Process). I want to ask whether LTCG tax is applicable or the amount is TAX-free?

Reply

362 Manish Chauhan March 22, 2012 at 12:25 pm

Vijay

Its a tough question , not sure if the tax will be applicable considered the Company status at the time of buying or Selling . please post a query on our forum for a right answer : http://www.jagoinvestor.com/forum

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363 sagar March 23, 2012 at 10:28 am

hi,
my father sold his ancient house for 115000 in april 2012 propery purchase in late 1965 by my grand mother which transfer on my father name in 1998 via civil court digree (other process to name house on ur name without and registration fee) now how much tax we had to pay, we even spen lot of money to repair that house time by time but how to show how much we spend

Reply

364 Manish Chauhan March 23, 2012 at 5:18 pm

Sagar

This question is better suited on forum : http://www.jagoinvestor.com/forum/

Reply

365 Rajesh D March 26, 2012 at 4:10 pm

Hi Manish

Your articles are very informative and sincerely put across.

I have a small query.
I had booked my flat in Pune in Apr 2008 and Registered in Nov 2008.
Now. I have received possession in March 2012.

I would like to sell at the earliest and buy another next door, house in the city I stay.
When can I sell it to qualify for Long Term Capital Gain.
Would it be 36 mths from Nov 2008 or from March 2012.

If I sell in April 2012, and if it is Short term CG, I can reinvest in another house under section 54.

Thanks in advance.
Regards
Rajesh

Reply

366 Manish Chauhan March 28, 2012 at 3:16 pm

Rajesh

I thikn you have crossed 36 months of time now, so you can sell it and as you will be reinvesting the money in new flat , dont worry about the tax part :)

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367 Naresh March 26, 2012 at 4:50 pm

Hi Manish (Repeating my question)
Thanks for all the info you posted.
We booked an apartment in 2006, got possession in 2012 and if we sell in 2012, I have following questions-
1. is it long term or short term gain?
2. how to calculate the indexing costs for the amount paid from 2006 in installments?
Thanks
Naresh

Reply

368 Paras March 26, 2012 at 5:08 pm

Naresh, regarding the point 1, its LTCG or STCG, would depend on the date of registry of the flat. So if you got the possession in 2012 and assuming you got it registered in 2012, it would be a STCG if you sold in 2012 itself.
Regarding your point 2, If you got it registered in 2012, then I think indexing would not be required, as the cost registered would be used for CG purposes.

Thanks!

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369 Rajesh D March 27, 2012 at 11:54 am

Hi Manish

Can you please respond.
I have already provided the registry date. Is the 3 yrs period for LTCG from date of booking(first installment), date of Registry or date of possession.

Thanks

Reply

370 Manish Chauhan March 28, 2012 at 1:51 pm

Rajesh

It would be mostly date of possession !

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371 Manish Chauhan March 28, 2012 at 3:11 pm

Paras

Are you sure that the registry date is taken into consideration , because on one of the forum , I read that its not that date but some other date !

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372 Paras June 4, 2012 at 8:05 pm

Manish, I am not sure but read it in one of the forums tha registry date is taken into consideration. Now I guess a CA would be the right person to get a response on this.

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373 Manish Chauhan June 4, 2012 at 11:20 pm

Yes , A CA or more than than an expert in Real estate would be more authentic in his answer

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374 Rajesh D March 28, 2012 at 1:10 pm

Hi Manish

Is the 3 yrs period for LTCG from
date of booking(first installment), or
date of Registry or
date of possession.

Thanks

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375 Manish Chauhan March 28, 2012 at 1:42 pm

Rajesh

There is confusion on this, but mostly its date of Possession

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376 Girish Hodlur April 12, 2012 at 10:02 am

Hi Manish,

Are you sure its the possession date. I was told the date of purchase (generally the date the agreement gets registered) is to be taken for all calculations purposes. I checked a couple of websites which show the LTCG calculations and eveery one of them talked about the date of purchase rather than the date of possession.

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377 MS Gurjar April 16, 2012 at 4:47 pm

I have question regarding long term capital gain tax in reference to sale the land.
In which condition capital gain tax calculate without indexation? And with indexation? if both have wide difference, which is counted ?

Reply

378 Manish Chauhan April 17, 2012 at 2:22 pm

MS

The lowest will be counted !

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379 Manish Chauhan April 17, 2012 at 7:34 pm

Girish

It might be the case then … Some websites also mentioned that the date of registry is to be taken ..

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380 Manish Chauhan March 28, 2012 at 3:12 pm

Naresh

1. Long term

2. It will be registered amount , not the actual amount paid in installments

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381 Dnyaneshwar Somase May 29, 2012 at 11:46 pm

Hi Manish,

I purchased a Flat costing Rs 4.75 L in year March 2003 on my wife name, she is housewife, same flat, we sold in Rs 17.40 L in May -2012. I paid housing loan interest around Rs 2.0 L for around 8 years. I also paid stamp and registration charges Rs 40000/- + Electricity charges Rs 40000/- during purchase. For calculating the purchase price, whether stamp duty & Registration charges, electricity connection charges as well as Interest paid on Housing loan considered for calculating purchase price of flat. So, i can calculate the indexed purchase price on considering above factors( i.e. Stamp duty& Registration, Electricity connection, Interest Amount on Home loan, …etc)

Secondly, I bought a new flast costing Rs 40 L with registry( Jan-2011) on my name, with home loan of Rs 30 L with joint Home loan account with my wife. Completion of flat is expected in Oct-2012, I have to balance amount Rs 10 L from Home loan account before completion. Whether I can use flat Captial gain amount received from above flat of wife name, to pay balance amount to new flat.

Please reply in details.

Many thanks in advance.

Dnyaneshwar Somase

Reply

382 Manish Chauhan May 30, 2012 at 6:02 pm

Dnyaneshwar

This question is best suited for http://www.jagoinvestor.com/forum

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383 Dnyaneshwar Somase May 30, 2012 at 11:49 pm

If you can explain the details, it will be useful

I am able to address my query on forum.

Please revert.

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384 Dnyaneshwar Somase June 1, 2012 at 11:41 pm

I currently have a buy to let flat in my sole name/mortgage. I want to transfer the property to my wife name.

Are there any other implications e.g. stamp duty, I assume not as it’s between husband and wife?

Many thanks in advance

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385 Manish Chauhan June 2, 2012 at 3:16 pm

I dont think so , the property transfer does not assume any kind of relationship like this , you will have to pay the charges

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386 Dnyaneshwar Somase June 2, 2012 at 3:48 pm

Thanks Mr. Manish for your reply.

Is their gift deed invloved?

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387 Manish Chauhan June 2, 2012 at 11:06 pm

Why gift deed ? Its just a normal transfer of property .. you should meet a property related lawyer for this , dont try to save the fees, you will save much more by goign to him, if you make some mistake, it will cost you in lacs

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388 vikram June 22, 2012 at 11:43 am

I plan to sell my house, which i bought in 07-08 for price of 11 lacs. Not my selling price is 12 lacs. which means on CII, there is a loss of 3.6 lacs. And i want to show this in my returns to save tax on salary.
Can i ask my employer to take this calculations and accordingly deduct tax.

Secondly, i want to buy a new house from the proceeds. Is that ok, with the above points

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389 Manish Chauhan June 23, 2012 at 8:18 am

Vikram

It can be adjusted with only a long term capital gain , not from the salary . So if you have any kind of GAINS , then this can be adjusted . If you do not have it in this year .. better mention it in the tax return, so that you can claim it later .

You can buy the next house using this , but there is no taxation angle .

Manish

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390 vikram June 25, 2012 at 10:19 am

Hi
When u say, mention it in returns, i didn’t understand.

Doesn’t it get adjusted with total taxable income ?
And how can i claim it later on ?

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391 mohamed tahir June 29, 2012 at 5:43 pm

Dear Manish,

Very helpful tips from your end.
Could you please help us for calculating the LTCG? our company had purchased 32.08 Acres of Agricultural land in 1982 at Kushalnagar, valued at 16,87,750 as per BS. We now sold 8.08 acres for 622 lacs including Buildings. what is the capital gain payable and how to avoid taxes and any tips to reinvest the same? my mobile no. 98459 18669.

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392 Manish Chauhan June 30, 2012 at 10:00 am

This is to complex and big thing to be discussed at blog, your company must have a CA right ? better involve him !

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393 RAKESH July 25, 2012 at 2:54 pm

I HAVE SELL PLOT THIS YEAR.PURCHASED IN 2000.CAN WE INCLUDE COST OF BOUNDARY WALL AND TEMPORARY STRUCTURE MADE ON IT (BEFORE SELL) WHILE CALCULATING CAPITAL GAIN.

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394 Manish Chauhan July 26, 2012 at 10:22 pm
395 Srinivas July 26, 2012 at 4:16 pm

I am curious to know how pending loans are treated when i sell a house.(Hypothetical).

I puchased a house in 2008 Jan and sold it in 2013 April(after Completing 5 years).
I invested 26 lakhs for the house(10 loan from father and 16 self)
By the time of sale, i repaid only 5 lakhs of loan. I sold the huse for 4500000. Would like to know what is my CG. specifically, where there will be any impact of my pending loan.

Thanks

Reply

396 Manish Chauhan July 26, 2012 at 9:15 pm

Its very simple

Your cost was 26 lacs , but the indexed cost will be different , lets say 40 lacs (example only) , now your SP = 450000 , so CG = 5 lacs !

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397 Srinivas July 27, 2012 at 11:13 am

It is logical.

Thanks for the reply.

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398 Kiran Patil July 30, 2012 at 5:32 pm

Dear Manish
I was read all the above Q&n to find out my query that is
My father was purchase a house in 1996 at the cost 1,60000/- and now in July-2012 I was sell that house at the price of 7,70,000/-. And now I want to invest the entire amout in resel property which is 6 years old.
Then in that case can I exempt. from Long term captial gain tax?

Reply

399 Manish Chauhan July 30, 2012 at 9:18 pm

Yes , you are exempt from it , In fact just see how much is the indexed cost ? If indexed cost is more than 7,70,000 , then there is long term capital loss and you can also adjust it with some other capital gain !

Reply

400 Kiran Patil July 31, 2012 at 9:13 am

Thanks.

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401 S Singh August 2, 2012 at 4:51 pm

Hi.

I have an apt for 4 years which I want to sell now and have a few questions –

1. The cost of the house was 18 lacs (I have receipts from builder) but the registeration was done at 12 lacs as per builder’s letter. What will be the cost of acquisition in this case? 18 or 12 lacs?

2. I did wood work and put electrical fittings of 2 lacs on getting possession of the flat. Is this included in the flat cost?

3. I paid 2.3 lacs as Interest on home loan till possession date. Is this included in the flat cost?

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402 Manish Chauhan August 4, 2012 at 7:19 pm

S SIngh

1. 12 lacs

2. No

3. NO

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403 Maria August 9, 2012 at 4:11 pm

Manish, my mother sold a couple of properties this year:
1. plot of land bought 2005, at 6lakh (registered@3L), sold 2012 for 65L (regd for same)
2. House in my deceased father’s name, constructed in 1993 for Rs.10L (site+constr.), sold 2012 for 49L.
Q: since the house was in my father’s name, seller was listed as mother+4 children. Money was distributed 10L to each member, so do all of us have to work out LTCG separately? Mum & I are buying an apt with her profit from the site plus my share of the house sale- will registering in both our names be enough to claim exemption from tax?

Reply

404 Manish Chauhan August 10, 2012 at 6:06 pm

Maria

This is a little tricky .. this needs few more minds to give answer – request you to ask it on our forum – http://www.jagoinvestor.com/forum

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405 Manyam August 10, 2012 at 6:10 am

Really very good information Manish, Btw is there any reliable link to refer latest CII values from inception.. seems above list until 2009 only..

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406 Manish Chauhan August 10, 2012 at 5:40 pm
407 Sumit August 11, 2012 at 4:58 pm

Hi dear All,

I have a unique problem in front of me. in August 2011 i bought a house and want to see it in August 2012 without even taking possession of the property. i have gained a very small amount (alomost nil) in this transaction.
1. Do I still need to pay Short Term CGT if yes then how to calculate the same.
2. Can I take the proceeds in cash and deposit the same in Bank without any harassment by Banks.

Pl reply ASAP…

BR,

Sumit

Reply

408 Manish Chauhan August 12, 2012 at 9:48 am

1. If there is any profit, then you need to add it in your income for the year and pay tax as per slab

2. That has nothing to do with anything , see how you want to get paid by the buyer , it is between you and bank

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409 bpn August 19, 2012 at 2:13 pm

sir,
1974 purchased ind.unit at Rs.44000/00;improvment chgs.211300/00 in 99-00 plus 175500 in 06/07;spent;
Sold 11-12 net 9131000,what is c.g./c.g tax payable.
Thanks.

Reply

410 Manish Chauhan August 19, 2012 at 10:18 pm

Please ask this on forum – http://www.jagoinvestor.com/forum

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411 bpn August 19, 2012 at 9:03 pm

In message no. 405 ,pl.read value of 1981 Rs.741000/00 as per valutaion report.

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412 Mohammed Alam August 30, 2012 at 1:24 am

Hi

I had booked a flat at the project launch of a builder in Jan 2007. I paid a total of 50 lakhs over the next 2 years i.e till Jan 2009 (25 lakhs each year). This included all costs except the registration and stamp duty charges. I did not register the flat and the same remained unoccupied till I sold the same (assigned my rights) in May 2012 for a total consideration of 58.5 lakhs. My queries are-

1. Will this be taken as CG/CL because the property was still unregistered ?

2. Would this be taken as any normal business transaction wherein I invested 50 lakhs and made a profit of 8.5 lakhs ?

3. If taken as a business transaction, will any indexation come into play ?

Thanks & regards.

Reply

413 Manish Chauhan August 31, 2012 at 10:55 am

The indexation will not apply in my opinion. It should be considered as regular business transaction , but it would be good idea to ask it on forum http://www.jagoinvestor.com/forum/

Manish

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414 jatin sehgal September 8, 2012 at 1:37 pm

Hi, I purchased a property in May 2012 for 37 lac. Now i want to sell the same and price i m getting is around 50 lac. Can you please suggest me what will be the short term capital gain tax? and If i want to do trading in the property, what will be the tax implication?

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415 Manish Chauhan September 8, 2012 at 7:27 pm

You need to pay tax on the profit of 13 lacs, there no tax saving you can do if the period of holding is lower than 3 yrs

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416 jatin sehgal September 9, 2012 at 3:13 am

Thanks for your reply. but do you have any idea what will be the tax amount. Correct me if I am wrong. will it be 30% of 13 lac? or there is some other calculation for it

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417 Manish Chauhan September 10, 2012 at 9:19 am

It will be added as your income for current year . If you are in 30% bracket , then yes , it will be 30%

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418 Supreet September 11, 2012 at 12:33 am

Hello Manish,
The information posted on this page is really very helpful and simplifies the way one can explain CG calculations.
My only question is, I plan to sell a Flat this month (Sep 2012) which was purchased in 1994. In order to calculate the Purchase cost with Indexation, what will be the CII for the current financial year (2012-13). Has it been released by the Govt., and if not when is it released in general.
Thanking You in advance.

Reply

419 Manish Chauhan September 12, 2012 at 11:03 am

Not yet published!

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420 DP September 14, 2012 at 2:05 pm

I had purches flat in Dec 2010 by 40 lac and and sold in May 2012 by 45 Lac In the next month i buy the new flat on 40 Lac. Then how much capital gain i need to pay?

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421 Manish Chauhan September 18, 2012 at 1:35 pm

How much was your captial gains ?

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422 Mandal September 14, 2012 at 3:56 pm

Hi,
I have bought a house in pune in 2005, on 6 lakhs. 6 lakhs was taken as a home loanfrom icici bank. Now in august 2012, I have paid 2.5 laks to bank to foreclose the loan. I am planning to sell the house in Ocotober ,2012 for 20 lakhs. Can you please tell me the tax I need to pay. can I get any exemption for the amount 2.5 lakh spent for foreclosure. I am paying 50000 as brokerage to sell the house and 25000 for NOC for co-operative housing society.

Reply

423 Manish Chauhan September 18, 2012 at 1:30 pm

you will not get any consession in that , you can calculate the tax to be paid based on the capital gains, which is explained in this article

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424 Prashant September 27, 2012 at 3:21 pm

Hi Manish,

After lot of searching on the internet, let me complement you that yours is one of the easiest and active blog over the net…so good work for novices like me :-). My query is as below

Background:

1) Bought a flat @ 31.50 lacs (June 2010),
2) Selling Price @ 51.50 lacs( Sept. 2012).
3) Capital Gain = 20 lacs. (assume after indexed calculation)
4) If I am again planning to buy a new house of 40 lacs now (within 2 months of selling above property), then does it mean I will have to pay NO tax since I am reinvesting my Capital Gain of 20 lacs back into the real estate
or
Will I have to pay tax, as I need to show the entire investment of 51.50 lacs collected by selling the above property.

Regards,
Prashant Chauhan

Reply

425 Manish Chauhan September 29, 2012 at 10:57 am

Prashant

You will have to pay tax on 20 lacs profit, because the capital gains benefit is available only when the house is sold after 3 yrs of possession , but in your case its less than 3 yrs !

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426 anil kumar k October 10, 2012 at 7:55 pm

dear manish
i purchased a flat in hyd and registered it in jan2010 for rs 40lacs. i intend selling the flat after jan2013 for 65 lacs.what is capital tax gains. i am planning to construct a house nearby. need tips to pay nil tax. regards anil

Reply

427 Manish Chauhan October 12, 2012 at 11:40 am

You tax will depend on the CII index on 2013 , But It will be somewhere 17-18 lacs, all you need to do is use this money in some other real estate investment .

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428 neeraj October 11, 2012 at 5:05 pm

we have purchase a property for rs 300000/- (3lac) in year 2003 what is the cost of this property today

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429 Manish Chauhan October 12, 2012 at 10:57 am

It will depend on the market price and location !

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430 sachin October 12, 2012 at 4:31 pm

hello,

I want to know property gain tax on my beow deal.

1. In 2009 I bought property in my hometown for 12,65,000, after buying that i did over 2 lacs of expenses in that property.
2. Now i’m selling it to 32 lacs within 1 week or 2.
3. By using that money i’m buying a flat in pune for 34 lacs. in a month. pune property is finalised, no payments done.

How much tax i need to pay ?

Thanks & regards,
Sachin Tikore
98810 63750

Reply

431 Manish Chauhan October 16, 2012 at 1:52 pm

Discuss it on our forum – http://www.jagoinvestor.com/forum/

Reply

432 Manish Chauhan October 16, 2012 at 3:03 pm

BEtter start a thread on our forum to discuss and calculate this – http://www.jagoinvestor.com/forum/

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433 sachin October 12, 2012 at 4:35 pm

Hi manish,

Please help me to calculate the property gain tax on below deal

Property purchase in 2009,
Purchase price 12,65,000
selling property in 2012
Selling price 32,00,000

New property buying in 2012
New property cost 32,00,000

Reply

434 Chinmay Patel October 15, 2012 at 4:43 pm

Hi,
I purchase commercial property in 2006 in Rs. 9,40,000/- on this property I take Loan Rs. 14,50,000/-… Now, I sale this property in 2012 in Rs. 22,00,000/- .
How can I save tax???
Can I calculate interest on that Loan ???

Reply

435 Manish Chauhan October 16, 2012 at 1:52 pm

It does not matter what is the loan amount , all you need to see is the buy and sell price only . Use the indexation method given in this article and find out the capital gain part, if you invest that much in some other real estate , then you can save tax

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436 suresh October 19, 2012 at 2:13 pm

Hi Manish,

Not everyone would like to share the knowledge or provide basic information to public. Which you are doing t, my sincere appreciation for your efforts.

My query

I bought a house in the year 2005 for 10 lacs and selling it for 25 lacs in 2012(oct).

#1 For the financial 2012-2013, whether the same 10%( wihout index) and 20% with index is applicable. or Should i consider my 30% tax bracket to calculate the LTCG tax.

#2 Few auditors claim that we have a excemption upto 23 lacs, meaning any sale within the limit 23 lacs will be exempted from capital gain. If this is true then i have to calculate my capital gain only for 2 lacs

#3 Till now i was under the impression, i need invest the sale proceeeds only in a existing built house. But from this site, it looks like i have to invest in a new property(Land or house)

Please clarify.

Reply

437 Manish Chauhan October 22, 2012 at 12:25 pm

1. Yes it will be applicable

2. I have never heard this, I dont think its true

3. Yes, new property !

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438 Kumaran R November 16, 2012 at 2:49 pm

Hi Manish
I have Purchased a flat in 2004 @ 15Lakhs ( 12.5 Lak Home Loan taken for this property ). I sold this in 2012 @ 73.5Lakhs ( Paid 9.4 Lakhs to the Bank as Outstanding Pricipal ). So Net in hand for me is 73.5-9.4 = 64.1 Lakhs

How do I calculate Capital Gain because though the sell price is 73.5 Lakhs, what I recieve in hand is Rs 64.1 Lakhs. So what will be my capital gain ?

Thanks..

Reply

439 Manish Chauhan November 20, 2012 at 4:35 pm

All you need is SELL price which is 73.5 lacs and the indexed cost price, which in 15 lacs indexed as per the procedure given in the article .

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440 amit November 22, 2012 at 3:06 pm

Amazing Blog and very very informative !!! Great Going Manish…..

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441 Manish Chauhan November 25, 2012 at 11:24 am

Thanks Amit !

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442 vijay patel November 24, 2012 at 10:07 am

can i gift to my house property ( approx value 10 lakhs ) to my elder brother , if yes what kind of tax liablity to my side and brother side ,this propety purchase in 1997 value Rs 191000 and renovatin & constcution cost 325000 in 2002 that time jont family after that i m purchase new house in 2007 name of my wife ,(Rs.9 lakh, my wife also teacher ) and today i want to sale this property to my brother this property vale of 10 lakh but i sold to my brother only 5 lakh can it possible if yes how much tax libilty to my side and othewise i not sold propety to my brother can i gift to my brother ,if yes how much tax liablity my side .

Reply

443 Manish Chauhan November 25, 2012 at 11:01 am

The tax liability will not be on your side if you gift it to your brother and if he sells it , then its totally a different thing . BUt if you sell it , you need to pay the tax .

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444 Suddeshna December 5, 2012 at 4:05 pm

Hi Manish

Tax without/with indexation @10% or 20% applies on capital gain right?How can 10% of 428826 be 85765 for taxation without indexation?

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445 Manish Chauhan December 11, 2012 at 3:58 pm

Did I say that somewhere in article ? Can you point me to that !

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446 Mudaliyar December 15, 2012 at 10:22 pm

We are paying EMI for my flat approx 30000.00 which is includes approx 28000 interest 2000 principal. Our total income is approx 3 laksh each person per annum, (Total 6 lakhs). However the join propery EMI is paying by both candidates My wife and my self. We do not want avail the interest excemption as our income is not taxable. Can we add this interest into our Flat value (asset) without using our exemption?

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447 Manish Chauhan December 19, 2012 at 2:37 pm

No , you cant do that :)

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448 Mudaliyar January 26, 2013 at 1:12 pm

Thank you somuch for your guidence

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449 Manish Chauhan January 30, 2013 at 5:09 pm

Welcome

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450 Narayan December 17, 2012 at 1:10 pm

Dear Manish ji,

I have certain queries with regards to Long Term Capital Gains arising out of selling residential properties and buying new residential properties. The case is as follows:

Residential Property A – Father, Son 1, Son 2 (Joint Owners)
Residential Property B – Father, Son 1, Son 2 (Joint Owners)
Residential Property C – Father

We wish to sell these 2 residential properties, namely A & B which are in our joint names. We will be eligible for Long Term Capital Gains as the period is more than 3 years now.

I have the following questions:

1. We intend to buy 2 new under-construction properties in the name of each son.
2. We intend to buy 1 ready-to-move property in the name of father.
3. Is the time-frame for the possession of the under-construction 2 years or 3 years from the date of sale of old homes? How is the possession date calculated? Is it mentioned in the agreement done with the builder or is there another way?
4. What happens to LTCG exemption if the builder delays the possession?
5. Since the father also has another residential property C, can he buy another residential property to take benefit of LTCG exemption under section 54.

Thanks.

Reply

451 Manish Chauhan December 19, 2012 at 2:12 pm

Narayan

This needs more discussion , please open a thread on http://www.jagoinvestor.com/forum/

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452 Raj S December 26, 2012 at 4:12 am

Manish –
I own a plot since the 1970s. We built on it in 1990 through a builder, and got 1 flat + some compensation for it. The plot is still in my name.
I want to sell the flat + title of the plot (even though FSI is consumed). Calculating the indexed value of the flat is not a problem since I had got a valuation done in 1991 for wealth tax reasons.
I am getting conflicting reports on the indexing of the land, because the land is on 998 year lease. Can I index leased land, or does the entire compensation attributed to land have to be reinvested?
Thank you.

Reply

453 Manish Chauhan December 29, 2012 at 9:04 pm

Thats out of my knowledge .. BEtter discuss it here on our forum http://www.jagoinvestor.com/forum/

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454 Rajagopalan December 26, 2012 at 6:58 pm

Dear Manish,

CPI starts from 1981. What would be the CPI for property purchased earlier than 1981, Say 1970?
Thank you

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455 Manish Chauhan December 29, 2012 at 8:32 pm

You need to contact a valuer to find out its worth in 1981 and then that will be the base for 1981

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456 Sunil December 27, 2012 at 10:36 pm

Hello Manish,
I purchased my property in 2005 and i sold my property in 2012. Meanwhile in Nov 2011 , i purchase another propery. Can i get exemption on capital gain?

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457 Manish Chauhan December 29, 2012 at 7:56 pm

I dont think it works that way , you have to use that money of capital gain for the second house, I think you should discuss it at our forum with other members . http://www.jagoinvestor.com/forum/

Reply

458 sanjeev February 28, 2013 at 3:18 pm

dear Sunil,
the answer to your question is yes, you can get the tax exemption, as it is clearly mentioned that the property should be bought before 1 year or within 2 years after the capital gains from th sale of the property

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459 soumya January 3, 2013 at 8:42 pm

Hi Manish,
I am investing in long term debt fund, and have been continuing for more than 1 year. I don’t have any plan to withdraw the money and wil keep it invested for next 5-6 years. I have following 2 questions:
1. Like FD, should I pay income tax every year or I should pay it during redemption.
2. For Rs 1 lac, if I gain 10% return per annum, how much tax should I pay after 5 years, I fall under 30% tax bracket.

Thanks for your reply.

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460 Wriju January 5, 2013 at 12:54 am

Hi Manish,

The excel file hosted on zoho is really helpful, thanks for sharing it.

I wanted to put in the CPI figures from 2009-2010 onward. Any known sources?

Reply

461 Manish Chauhan January 7, 2013 at 7:21 pm

Thanks for appreciation .. find out the info on net, you will find that info !

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462 Wriju Bharadwaj May 6, 2013 at 8:25 pm

Hi Manish,

One question regarding taxation with v/s without indexation which one applies to cap. gains from sale of residential flats?

Plus are there any specific benefits for senior citizen women.

On a separate note, I noticed the sheet on ZOHO has some missing/hard-coded values, I have updated a copy of the sheet but
a. I don’t whether the calculations (post changes) are correct
b. how can one update the copy on ZOHO so that everyone on this site can take benefit???

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463 pattni January 18, 2013 at 8:44 pm

My father gifted me a flat in 2011 April. The stamp duty was calculated on Rs 3300000 from RR ,as the building is 40 years old. Actual price at the time was 80 to 85 lakhs. Now a flat is over 1 crore. It is going to go for redevelopment. In five years time the price will be much much higher. How will my capital gain tax will be calculated ? Can i avoid capital gain tax, as i am a British citizen and the flat has been gifted to me.

Thanks in advance for any guidance.

Reply

464 Manish Chauhan January 19, 2013 at 8:02 pm

No you cant escape the tax like this .. its very simple .. you bought it at 33 lacs and then you will sell it at some PRICE .. so capital gains tax has to be calculated just like its shown in this article

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465 VASUDHA February 5, 2013 at 3:36 pm

dear sir,

I am the direct allottee of this BDA property. Got allotted in 28/03/2003 but got registered in my name in 19/05/2005
PFA the sale deed, allotment letter and khata for your reference.

There are no consturction or structure on this property, It is still a vacant land.

Currently the property is under GPA in my dad’s name .
I found a buyer for this property. He has agreed to pay 1.51 crore for this property. According to him the current book value of this property in this area (SMV Layout 3rd block) is Rs. 1300 per sft
The book value may come around 50lakhs. So he is saying he can register the property upto 50 lakhs and remaning he will pay by cash.

Planning to have the sale agreement by mid feb 13 and complete the registration by April 2013.

I have following questions:
1) If I complete the registration by April 2013, what will be the capital gains on this property?
2) Since I have provided GPA to my dad, will the sale proceeds will come to me or this can be handled as my dad’s transaction?

Thank you

Reply

466 Manish Chauhan February 6, 2013 at 10:32 am

Vashudha

I think a better reply will come by discussing it at our forum , please start a thread there – http://www.jagoinvestor.com/forum/

Reply

467 Gopal February 22, 2013 at 4:28 pm

I booked an apartment in 2005 and it was handed over to me in April 2010. However the registration took place only in March 2011. If I sell the property in April 2013, will it be treated as LTCG or STCG?

Reply

468 Manish Chauhan February 25, 2013 at 5:50 pm

Should be long term ..

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469 Rohit P March 4, 2013 at 11:29 am

Hi Manish
I have purchassed a flat in Bhopal in Dec’2009 in 11 lac including registree & all, and got the possesion in Sept’2010. Now I want to sell this flat in 18 lac in March’13 and taking one new flat in march’13 itself of Rs 20 lac (Including Registree & all cherges). for which I will take loan of Rs 15 lac & 05 lac will be a DP (including Registree).
1) How much will be capital gain?
2) I still have to pay tax, in case if i bought a new flat.
3) Is it LTCG or STCG.

Reply

470 Nitin March 7, 2013 at 6:19 pm

Hi,

I purchase property in May 2007 for 17,67,454 (inclusive of Stamp duty, Registration fee and Brokerage), now i have sold the same in Jan 2013 for Rs. 40,00,000. I am not purchasing Res. Property. I want to utilize that money for my personal use. how much Tax i have to pay? and if i want to put in NHA bond how much i have to put?Can i purchase property worth 12 Lakhs and use remaining money?

Reply

471 Manish Chauhan March 7, 2013 at 8:58 pm

Just calculate the capital gains as explained in this article, and that the amount you will have to pay tax on .

Reply

472 Nitin March 7, 2013 at 11:53 pm

Thanks Manish for quick response, I have calculated capital gain as per your instruction. But 2 CA’s are saying 2 different thing so i am confused. My Capital Gain comes to 12,67,022/- and Tax with Indexation comes to 2,53,404/- and without indexation comes to 2,23,255/-, so my 3 questions are 1)for paying tax i have to pay 2,53,404 or 2,23,255/- . and (2)if i want to put money in NHA bond how much ? is it 12,67,022 or 2,53,404 . (3)Instade of paying tax can i buy a property worth 12 Lacs and use other money for my personal use. I have to take decision fast because if i don’t buy property then i have to pay advance tax before 15 march. Please help.

Reply

473 Manish Chauhan March 8, 2013 at 7:15 pm

1. 223255 .. lower is to be paid

2. Its 2,53,404 !

3. Yes, you can buy another property , only if you have sold the property after holding for 3 yrs !

Reply

474 Nitin March 8, 2013 at 9:16 pm

Thanks Manish for your quick reply, really appreciated. I have got the same reply for Q1 & Q3. Are you sure that your Answer for Q2? I am not doubting, but my CA says i have to put 12, 67,202 in NHA Bond?
Please Clarify

Reply

475 Nitin March 9, 2013 at 11:18 pm

Thanks Manish for your quick reply, really appreciated. I have got the same reply for Q1 & Q3. Are you sure that your Answer for Q2? I am not doubting, but my CA says i have to put 12, 67,202 in NHA Bond?
Please Clarify

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476 Amit March 8, 2013 at 4:34 pm

I bought a fliat in Mumbai in Jan2012 for 24 Lacs. Now in Apr2013 I am selling it for 32 Lacs and I’ll be investing this amount imidiately to buy another flat in mumbai for a price of 60 Lacs. Do I need to pay any tax?

Reply

477 Manish Chauhan March 8, 2013 at 6:49 pm

Surely you do ! .. this gain of Rs 8 lacs will be short term capital gain and should be added in your income .. No way to save this part of tax !

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478 Rohit P March 9, 2013 at 11:02 am

Hi Manish
I have purchassed a flat in Bhopal in Dec’2009 (Registree Date) in 11 lac including registree & all. Now I want to sell this flat in 18 lac in March’13 and taking one new flat in march’13 itself of Rs 19 lac (Including Registree & all charges) for which I will take loan of Rs 15 lac & 04 lac will be a DP.
1) How much will be capital gain?
2) I still have to pay tax, in case if i bought a new flat.
3) Is it LTCG or STCG.

Reply

479 Manish Chauhan March 13, 2013 at 12:40 pm

Rohit

1. YOu can get the numbers, by using the same method explained in this article

2. No , if you use the capital gain to buy a new flat, you dont have to

3. its a LTGC

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480 Rohit P March 13, 2013 at 12:48 pm

Thanks Manish…

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481 Vikas March 11, 2013 at 4:26 pm

Hi Manish,

I purchased a flat in Pune in FY 2005-2006 for Rs 11.2 lac and sold it in the FY 2012-2013 for Rs. 40.95 lac.
I purchased another flat in Pune itself in the FY 2011-2012 for 53 lac on loan which was prepaid in Jan 2012.(The second flat was purchased while I was still holding the first one)

Now my questions are,
1. Is the Long Term Capital Gain Tax still applicable to me. If it is applicatble, please suggest me the investment options.
2. I possess another flat in Nasik since year 2005 (which makes the number of flats I am holding at the time of above flat sale – 3) Is LTCGT related to number of properties I am holding?

Thanks and regards,
Vikas
msp01_2006@yahoo.com

Reply

482 Manish Chauhan March 13, 2013 at 11:42 am

Vikas

I think a CA would help you better in this case, He will be able to connect things and make sense of the overall picture.

Reply

483 Anand Shivarkar March 17, 2013 at 12:29 am

Hello Sir,

I have a bought a land in 2008 for 1.20 lacs and sold in 2013 for 2.50 lacs so please tell what tax amount i have to pay as capital gain

Reply

484 Manish Chauhan March 19, 2013 at 11:23 am

You can easily calculate it from the prodecure given in the article

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485 Vipul March 17, 2013 at 12:44 am

Hi..
I have purchased a RESIDENTIAL property in Nov. 2002 worth Rs. 3,92,130 (including stamp duty and etc.)… i sell this property in Oct. 2012 for Rs. 12,50,000….. the indexed cost is near about Rs. 7,50,000…… so my
LTCG is Rs. 12,50,000-7,50,000 = 5,00,000
Now i have purchased a COMMERCIAL property in feb. 2013 for Rs. 6,50,000 (including all the expenses)…
Now the Question is… Is there any tax liability for me..???

Reply

486 Manish Chauhan March 19, 2013 at 11:23 am

No

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487 SUBHASH SHUKLA March 18, 2013 at 11:56 pm

Sir,
iI have purchased house in 7 aug 2004 Rs.532000/ (with stamp duty)
And construct first floor in 2010 cost Rs.500000/- and bank loan taken for 400000/ and 300000/ to meet expenses. now i am selling house Rs.2300000 in mar-2013

Is there any CGT?
And how can i save it?

Reply

488 Manish Chauhan March 19, 2013 at 10:22 am

Subhash

Its already discussed on the article , what point are you not able to find out yourself ?

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489 Vijay Goyal March 19, 2013 at 11:48 am

Sold a residential plot for 30 lacs on 1.3.2013, purchased at 1.50 lacs on 1.9.91. Whether tax without indexation shall be 10 % or 20 % , as it proves to be cheaper

Reply

490 Manish Chauhan March 19, 2013 at 12:04 pm

Whatever is less will be applicable !

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491 Vijay Goyal March 19, 2013 at 1:43 pm

I am not clear from ur reply. i wish to pay LTCG by non indexation at 10 %. Am I right?

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492 Manish Chauhan March 21, 2013 at 9:18 am

Yes, you can do that

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493 amitk March 20, 2013 at 1:42 pm

Hi,
I bought a house in Mumbai in Feb2012 for 24 Lacs excluding 1.30 lacs of stamp duty/registration, 40,000 of brokerage and 12,500 of society transfer. So the overall cost of the house is 25,82,500.
Now in Apr2013, I want to sell it for 29.90 Lacs due to personal reason and I’ll be investing this amount immediately to buy another flat in mumbai for a price of 65 Lacs.
In these peiord I have already paid home loan interest of 2.30 lacs, so the actual income i earned technically is 1,77,500.

My CTC salary is 7 Lacs. I am worried about paying heavy tax for next year as I’ll be buying new house which is costing more.

Also, my father was the co-applicant in this property, however he is not working now and do not file any tax returns. He funded me 2.50 Lacs to buy the property.
Will his contribution be considered for tax savings?

Please guide me the best possible way to pay less tax.

Reply

494 Manish Chauhan March 21, 2013 at 8:45 am

The only thing which is applicable is the PURCHASE AND SELL price . The difference is your profit and it has to be added in your income and you have to pay tax . There is no way to save tax here as it was done before 3 yrs !

Reply

495 ashala jauhari April 17, 2013 at 6:34 pm

Dear Amitk, please post the query again in forum.

http://www.jagoinvestor.com/forum

A workable solution is possible.

Thanks

Ashal

Reply

496 J N GANDHI March 20, 2013 at 4:45 pm

Pl calculate capital gain and tax there on.
Purchase Year : 01.10.2000
Purchase amount :385000
Selling Date :25.03.2013
Selling Price :60,00,000/-
New Purchase :45,00,000/-
Date :30.03.2013

Reply

497 Manish Chauhan March 21, 2013 at 8:42 am

What problem are you facing in calculating it ?

Reply

498 Prasad March 22, 2013 at 10:00 am

Dear Manish,

I am a senior citizen, entering 65 in this fin year. I was allotted a flat by VUDA ( vizag urb dev authority) for a consideration of 1.6 laks tentatively in Jan 1991. The flat after completion was registered in my favour, after cost escalation, for Rs. 3.6lakhs plus stampfee etc of Rs 36000 during June 2003. I sold it off for a consideration of 20 lakhs on 28.02.2013.

Pl advise me what would be my tax liability? which date I should take into consideration? The date of allotment, or the date of Registration for calculation of purchase price? what is the exemption limit in case of CGS? is there any?
Prasad

Reply

499 Manish Chauhan March 23, 2013 at 9:53 am

It should be date of allotment , you can use the same method given in this article to calculte your tax gains ..

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500 Mudaliyar March 26, 2013 at 5:06 pm

Dear Chauhan,
I reced a order U/s 271A of the income tax act 1961 that to pay amount of Rs.25000.00. The penalty made by officer that my account shown under section 44AF, but it should be 44AA to maintain a/c.. My business activities that are selling flower bouquet through web site. Order is received from overseas clients and delivery made in India by us some times by our network florists. Some time the delivery goes to overseas via our network florists in abroad. In this case what is the section to be maintain to show our accounts? Kindly guide me. thanks.

Reply

501 Mudaliyar March 26, 2013 at 5:09 pm

Sorry, I forgot to show the turnover, it below rs.25 Lakhs. Thanks.

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502 Manish Chauhan March 27, 2013 at 9:16 am

Did you pay service tax ? When your turnover is more than 10 lacs, you have to pay service tax .

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503 Mudaliyar March 27, 2013 at 10:42 am

Dear Chauhan,
I have not paid Service Tax. Because My service all goes to Overseas, Hardly less than 50000/annum doing in India. Fund is receiving in FC. Thanks.

Reply

504 Manish Chauhan March 27, 2013 at 11:57 am

Ok , in that case you dont need to pay service tax as of now ..

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505 Vijay Zanvar May 3, 2013 at 2:28 pm

Manish,

Investing the capital gain earned on selling an immovable property to buy another immovable property saves tax on the gain. So there should be similar ways for saving tax on capital gain earned from FMP. Please elaborate, or considering writing another post.

Best,
Vijay Zanvar

Reply

506 Shriyash May 7, 2013 at 10:58 am

Hi Manish,

I bought a flat in 2004 for 13.43 lacs (stamp duty+flat price). I am now selling it for 73 lacs.

My LTCG is almost 59.6 lacs. Following are my queries.

1. Who decides on 10% or 20% (with or without indexation) tax on LTCG? Because with indexation my tax will be higher and I would want to go for without indexation tax?
2. If I buy a commercial property will this LTCG can be used and tax be saved?
Regards
Shriyash

Reply

507 Manish Chauhan May 10, 2013 at 4:22 pm

1. Its always the lower one .. so you choose one which is lower

2. I dont think so . It has to be residential

Reply

508 Wriju Bharadwaj May 8, 2013 at 3:11 pm

Hi Manish,

One question regarding taxation with v/s without indexation which one applies to cap. gains from sale of residential flats?

Plus are there any specific benefits for senior citizen women.

On a separate note, I noticed the sheet on ZOHO has some missing/hard-coded values, I have updated a copy of the sheet but
a. I don’t whether the calculations (post changes) are correct
b. how can one update the copy on ZOHO so that everyone on this site can take benefit???

Reply

509 Manish Chauhan May 10, 2013 at 3:52 pm

Wriju

Yes, its applicable for residential flats also . Let me look at the ZOHO sheet and come back to you

Reply

510 Wriju Bharadwaj May 13, 2013 at 11:18 am

Hi Manish,

Sorry my question wasn’t clear.

If a person is selling a residential property bought 10 years ago, when the income tax calculation needs to be done which one will apply?

a. with indexation
or
b. without indexation

Or is it that I have a choice between the two?

Also is there is relief/benefit for senior citizen women?

Reply

511 Manish Chauhan May 18, 2013 at 2:04 pm

You can take which ever is lower

Reply

512 Wriju Bharadwaj May 18, 2013 at 4:13 pm

Thanks….

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513 Wriju Bharadwaj August 6, 2014 at 1:57 pm

Hi Manish,

Could you please indicate the Income Tax Act/Section which clarifies this rule of 10% and 20% (or states that the assessee can choose etc.)? I am asking for this because I got 3 different responses from 2 tax consultants and 1 chartered accountant (10, 20 and believe it or not the CA insisted 30%). That’s where I got confused; also I was browsing through jagoinvestor forum

http://www.jagoinvestor.com/forum/capitals-gain-indexation-query

It looks like someone replied to a similar query saying that
———————————————–
“The option of paying tax at 10% without indexation is only available in the case of financial assets like mutual funds and the like; it is not available in the case of immovable property – for property, the tax has to be calculated at 20.6% post indexation”
———————————————–
An old post from 2011, but got me concerned nonetheless.

Thanks and Regards

Reply

514 nithin May 10, 2013 at 11:53 pm

property sold on may 25 2011. money put in capital gains account. now what is last date before i can buy a flat?? is it may 25 2013?? is there any grace period?? can the capital gains money be used for paying the sales tax also

Reply

515 Manish Chauhan May 18, 2013 at 2:18 pm

Yes its may 2013

Reply

516 Sanjay May 19, 2013 at 10:39 am

Dear Manish,

Is tax on capital gains independent on which tax slab the person is in or there is a connection ? I mean will the person have to pay tax on capital gain even if he/she is in min tax slab ?

Regds
Sanjay

Reply

517 PRADEEP KUMAR May 25, 2013 at 5:36 pm

NOT REQUIRED TO PAY .

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518 Manish Chauhan May 25, 2013 at 6:52 pm

It does not matter.

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519 Sanjay May 25, 2013 at 7:22 pm

I am confused. I am seeing 2 contradicting answers.

Person will have to pay or not ?

Reply

520 PRADEEP KUMAR May 25, 2013 at 5:33 pm

A PROPERTY IN NAGPUR SOLD DURING THE YEAR 2012-13 AFTER DEATH OF MY FATHER WHICH WAS PURCHASED IN 1971 BY MY FATHER .I NEED INDEXED COST OF PROPERTY AS ON 01/04/1981 TO CALCULATE LONG TERM CAPITAL GAIN.HENCE I WANT TO KNOW WHAT DOCUMENT AND FROM WHERE I HAVE TO OBTAIN FOR THIS PURPOSE.

Reply

521 Manish Chauhan May 25, 2013 at 5:49 pm

PRadeep

You will have to hire a Vauluer for this .

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522 ADARSH MOHAN May 28, 2013 at 3:01 pm

Dear Manish, Thanks a lot for such informative website. My querry is that recently I had sold my property on 25th may 2013 @ Rs 40 lacs. Cost of purchase was Rs 34.54 lacs. Date of allotment was 31.08.2009 where as date of registration was 11.10.2012.

My CA says that date of purchase shall be date of registration i.e. 11.10.2012. Accordingly, there shall be a SHORT term capital gain of Rs 5.46 lacs.

However, as per your response in http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html to Mr Prasad at Sl No 494 & 495, date of purchase shall be Date of allotment i.e. 31.08.2009. According to this, indexed purchase value shall be Rs 48 lacs and LONG term capital loss of Rs 8.00 lacs.
Kindly clarify. You are also requested to convey the treatment of this LONG term capital LOSS.

Regards

Reply

523 Manish Chauhan May 31, 2013 at 5:03 pm

Actually this is grey area ! .

Reply

524 Saravanan A May 30, 2013 at 2:38 pm

For the question you have asked at end, I tried to calculate. Looks like still we need to pay Tax for 1.66L which is the net profit. Am I right, you have asked how to avoid the whole tax?
Calculation which I tried is given below:
10*582/406
14.33 => Indexed Price
30-14.33
15.67 => Profit in House

10*582/551
10.56 => Indexed Price
3-15.67
-12.67 => Profit in Stocks

Net Profit
14.33-12.67
1.66

Reply

525 Soaham May 30, 2013 at 3:07 pm

Hi Manish,

This is really amazing… I have subscribed to both the Wealth Club as well as the 100 Money Actions programs… While it was great to see that I already have fairly got everything on track as far as the 100 actions were concerned, I am now looking forward to the benefits from Wealth Club subscription…

I had asked a question some time back when you sent emails asking about Tax-related queries… I did not get a response on that so I thought I’d post it here –

Background –
Like many others like her, I have got my wife to trade in the markets as well. The investments are not a lot and currently hover around 600,000. Since September 2012 when she started working, till Mar 31, 2013, her profit was about 60,000/-

Now this is not taxable as per the tax slabs. However, this is still her Short Term Capital Gains. This is her only source of Income…

Considering (and building upon) this scenario, I have the following questions –

1. If her net profit from trading is < 200,001 – Will she pay any taxes? If so, would it be at 15%? Or she will not pay anything as her profits for the FY are below the taxable income slab?
2. If her net profit from trading is between 200,001 and 500,000 – Will she pay 10% Income Tax considering the Tax Slabs, or pay flat 15% STCG Tax even if her income is in 10% range?
3. If her net profit from trading is between 500,001 and 1,000,000 – Will she pay 0% for profits up to 200,000, 10% for profits up to 500,000, and 20% for profits that are more than 5L and less than 10L? Or will she pay a flat 15% on the entire profit amount?
4. Finally, if her net profit is more than 1,000,001 – Will she pay 0% for profits up to 200,000, 10% for profits up to 500,000, 20% for profits up to 1,000,000, and 30% for the remaining profit amount? Or will she pay a flat 15% on the entire profit amount?

Thanks in advance,

Best,
– Soaham

Reply

526 Manish Chauhan May 31, 2013 at 4:18 pm

1. No tax, if the income is below 2 lacs (whatever source it is, does not matter) , no tax. the 15% tax is there only when your income is above the taxable limit

2. In that case flat 15%

3. no , flat 15%

4. same

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527 Babu June 7, 2013 at 11:18 pm

Dear Manish,

Thanks for your informative article. I think the “Capital Gain” and “Tax with Indexation” was calculated wrongly in the below link. Kindly apologize if am mistaken.
http://public.sheet.zoho.com/publish/manish.pucsd/temp

Reply

528 Manish Chauhan June 8, 2013 at 10:36 am

Will take care

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529 Babu June 8, 2013 at 1:41 am

Dear Manish,

Thanks for your wonderful post. Please correct the Capital Gain and Tax with Indexation calculation in your CAPITAL GAIN calculator. In your calculator, capital gain was not used to calculate the tax indexation.

-Babu

Reply

530 Manish Chauhan June 8, 2013 at 10:32 am

Will do . Thanks for pointing it out !

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531 Sunita June 10, 2013 at 1:31 pm

Dear Manish,

Thanks a lot for this informative article.

I have a question in regard to calculation of LTCG while selling a constructed house. As I understand, on the cost side, I can include the cost of land, stamp duty while purchasing the land and the cost of construction later on. I can add these three components and then index the total to come up with the final cost.

For cost of land and stamp duty, I guess I can use the original sale deed of the land in my favor.
I am however not clear what is the basis for cost of construction. I had a detailed estimate prepared by a registered architect during construction. Can I use the cost mentioned in this estimate as the cost of construction and use the same for indexation.

Thanks and Regards,
Sunita

Reply

532 Manish Chauhan June 14, 2013 at 11:35 am

Hi Sunita

I think it can be answered on our forum http://www.jagoinvestor.com/forum/

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533 Patel Bhupendra June 11, 2013 at 4:59 pm

I have 4 acare agriculture land (vadilo parjit it means straight line varsdar ) in (VUDA) nearby corporation of vadodara , same agriculture land transfar into N.A. in March-2013, and can I sale my N.A. land ? How to calculate Capital Gain Tax, and if I sale Rs.500=00 per sq.ft.,what is alternative of Tax save? where I have to invest this tranction amount to save capital gain tax ?

Reply

534 Manish Chauhan June 14, 2013 at 11:14 am

You can invest the money in Capital gains bonds or NHAI bonds !

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535 googly June 12, 2013 at 3:34 pm

I have purchased a flat for 10L in oct 2002. Sold it at 70L in 2013. Apart from the indexation, Can I avail things like interest paid on loan on flat? or things like expenses done on flat like repairs?

Thanks.

Reply

536 Manish Chauhan June 14, 2013 at 10:59 am

No , you cant !

Reply

537 sunanda rajiv kumbhar June 16, 2013 at 10:54 am

sir, i have purchased a new flat for rs. 2000000 by making a loan in bank. after a month i have sold my old flat for rs. 1300000. my capital gains tax works out as
rs. 131437. please tell me whether it is correct or not
and one more that, i am going to incurr rs. 200000 for furniture and service tax and vat tax incurred for new flat comes out as around 200000. can i claim this amount and deduct it from my capital gain or not. or if i do some alterations in my new flat is it deductible from capital gains amt

urgent please

Reply

538 Manish Chauhan June 22, 2013 at 9:52 am

You can only claim for Stamp duty under section 80C

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539 Ganesh June 17, 2013 at 3:16 pm

Dear Sir,
I had sold my home to Rs. 23 lakhs after (purchase on jan 2005 for Rs. 4,33,000) 8 year (on 4th may 2013) & purchase 2nd flat for Rs. 53,75,000 (10th may 2013) & settled my existing (occupied flat) home loan of Rs. 16,40,000 (13th june 2013)
my queries are,
1. what will be minimum capital gain ?
2. Best option to save capital gain tax ?
Please guide me! Waiting for your reply………

Reply

540 Ganesh June 17, 2013 at 3:47 pm

out of Rs. 53,75,000/- (cash paid 8,06,000/-, loan 45,68,750/- & stampduty/registration Rs.3,50,000/-)

Reply

541 Manish Chauhan June 21, 2013 at 4:45 pm

Would suggest you to start a thread on http://www.jagoinvestor.com/forum/

Reply

542 Amit June 27, 2013 at 5:10 pm

How to calculate capital gain on sale of ESOP?

Reply

543 Manish Chauhan July 1, 2013 at 4:15 pm
544 Ankit July 1, 2013 at 9:03 pm

The excel sheet for computing capital gains with and without indexation is wrong in many places, please correct it.

Reply

545 Manish Chauhan July 5, 2013 at 10:46 am

Will do

Reply

546 Mahesh Thakur July 2, 2013 at 10:33 pm

Hi Manish,

We Sold our flat for 37Lacs in June 2013 (purchased for 20Lacs in March 2008)
using the capital gain calculator, indexed purchase price is around 32Lacs.

we booked a flat which is under construction in May 2013(one month before sale of our flat) and paid 6L as booking amount.

do we still have to pay capital gain tax?
please let me know.

Reply

547 Manish Chauhan July 5, 2013 at 10:27 am

No you dont have to in that case !

Reply

548 Balaiah, K July 4, 2013 at 12:57 pm

My wife purchased a residential plot in 1986-87 for Rs.2200/- This was acquired by Govt. of AP for laying roads and compensation of Rs.330000/- is paid in 2012-13. Out of this Rs.33000/- was deducted towards IT and form 16A issued. My wife is House wife no other income is existing ever since her marriage in 1971. No income is also likely to accrue in future. Will you kindly compute her tax liability and intimate quickly and suggest measures. Thanks.

Reply

549 Manish Chauhan July 5, 2013 at 9:47 am

The TDS cut is more than her tax liability . IT has to be only 13,000 . Rest has to be claimed back by filing returns !

Reply

550 shaheen July 16, 2013 at 1:32 am

Hi Manish, a few questions for you.Take this case. Suppose MY MOTHER AGED 68 YEARS, sold agricultural land for 2.5 crores. Will there be capital gains tax on sale of agricultural land? If yes, then if she buy three house in HER NAME for 50 laks, 30 lakhs and 20 lakhs respectively in HER NAME, will this amount (1 crore) be offset for the purpose of calculation of capital gains tax after taking into account ? In other words, would the capital gain tax be now payable on the remaining 1.5 crores only after taking into account indexation? If SHE buys one house in her name, 2nd house in my name and third house in my wife’s name then would she still be offset for the amount spent on purchase of the 2nd house and 3rd house as well or will the gift tax be liable to be payable by me and my wife? What is the gift tax rate? Last question, the area I live in has been declared as educational belt by the govt. Does this mean that the ‘land use’ has automatically become commercial from agricultural ?

Reply

551 Manish Chauhan July 18, 2013 at 3:35 pm

No shaheen

She cant do that, because agricultural land sale money can be offset only when another agri land is purchased. She cant take money from agri land sale and then buy commercial or residential lands or property . I would say if this amount of money is involved, better hire a Good quality CA !

Reply

552 shaheen July 18, 2013 at 9:34 pm

Thanks Manish. But you did not answer the last query that the area I live in has been declared as educational belt by the govt. Does this mean that the ‘land use’ has automatically become commercial from agricultural ? If it has become commercial then would she have to buy commercial property to offset the capital gains tax or can she buy residential plot/property too to offset it?There is also a school and a college as my next door neighbors. Our land is nestled between the two.

Another question. If she gifts the sales proceeds amount to me and my wife, then would she still have to pay capital gains tax? And would I and my wife be liable to pay income tax on this amount?

Reply

553 Manish Chauhan July 20, 2013 at 2:00 pm

Actually its going a little deeper into this, which I think should be consulted to a CA :)

Reply

554 Junaid July 23, 2013 at 10:18 am

Hi Friends,
I am a salaried person, having form 16.
I have income from Interest from my salary account.
I have a little LTCG, and STCL of about 8K.
My problem is, filling ITR-2 sheet, as the sheet CG-OS looks big puzzle to me.
Please help me, what to fill in A 2a ~2d ( I have a loss of 8K)
and i have a LTCG, i bout shares two years back and sold last year with a gain of around 5k. which section of B i should fill, and how to fill.
(Please help me , as this is my first experience with the ITR-2)

Reply

555 Manish Chauhan July 29, 2013 at 6:02 pm

Why are you not taking help of a CA or online filing websites .

Reply

556 arya July 29, 2013 at 9:58 pm

Hi Manish,

I bought an underconstruction flat last year ( July 2012) which I took posession on April 2013. My total expenses till now for acquiring the flat is 56.25 lacs breakdown is 40 lacs ( basic price ) + 3.25 lacs ( parking and amenties ) + 5 lacs ( Registration and VAT ), 4 lacs ( wood work ) and till now I have paid bank interest of 4 lacs. I have registered the flat as per the guidance value which came to about 30 lacs.

This month I am selling the apartment to a buyer for 66 lacs. He says he’ld deduct 1.03% as TDS straight away. That makes my profit 9 lacs.
The buyer is going to register the property for the full agreement value of 66 lacs.
If my short term capital gain is calculate as 66 lacs – 30 lacs = 36 lacs and if i pay according to tax slab of 30% i end up paying 10.8 lacs as tax !!!!! Plus I already paid 67900 TDS !!! So I am completely at loss.

Are my above calculations correct ?

Reply

557 Manish Chauhan July 31, 2013 at 5:51 pm

Yes. But thats how it will happen, your cost will be 30 lacs only

Reply

558 arya July 29, 2013 at 10:10 pm

Let me elaborate on my queries:-
1. While calculating the STCG are costs like wood work, stamp duty, home loan interest considered part of cost ?
2. The buyer is actually paying 5 lacs for wood work. Should this be part of the Sale deed and be calculated as my income ?
3. If the buyer registers based on the guidenace value of 30 lacs ( if that is allowed for resale properties ), would that be considered my income and STCG be calculated as Nil ??

Reply

559 Manish Chauhan July 31, 2013 at 5:50 pm

1. Only the registered value of house in agreement is taken as COST PRICE

2. No it should be not

Reply

560 arya July 31, 2013 at 11:31 pm

According to http://incometaxindia.gov.in/Archive/HowtoComputeyourCapitalGains_18062012.pdf

Short Term Capital Gains is computed as below:
STCG = Full value of consideration – (Cost of acquisition + cost of improvement + cost of transfer)

Full Value of Consideration – This is the amount for which a capital asset is transferred.

Cost of Acquisition – Cost of acquisition of an asset is the sum total of amount spent for acquiring the asset. Where the asset was purchased, the cost of acquisition is the price paid. Any expenditure incurred in connection with such purchase, exchange or other transaction eg. brokerage paid, registration charges and legal expenses etc.., also forms part of cost of acquisition.

Cost of Improvement – The cost of improvement means all expenditure of a capital nature incurred in making additions or alterations to the capital asset. However, any expenditure which is deductible in computing the income under the heads Income from House Property, Profits and Gains from Business or Profession or Income from Other Sources (Interest on Securities) would not be taken as cost of improvement.

So, in my case the STCG would be
66lacs FVC – 48.25 lacs CoA (40 lacs basic price + 3.25 lacs parking and amenties + 5 lacs Registration and VAT ) – 4 lacs CoI( wood work ) = 13.25 lacs

Reply

561 Manish Chauhan August 5, 2013 at 1:33 pm

Thanks for digging out that info . I will have to check it in detail and let me come up with an article on this . I might not be aware about it fully.

Manish

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562 Rahul July 30, 2013 at 7:45 pm

Hi Manish,

Thanks for this informative post. I am filling in my returns now and am stuck with a problem with calculating capital gains. I had been granted stocks in my company in US. They were held in a Demat account in US. I sold the stocks a couple of years back. But I transferred the money to India this year. The dollar-rupee conversion rate on the day I sold the stocks (I have paid tax based on that) was less than the rate when I sold it. $1 == Rs 44 when I sold the stocks. $1 = Rs 54 when I transferred money to India. Does this difference constitute a capital gain ? If so, is it LTCG or STCG ?

Thanks

Reply

563 Manish Chauhan July 31, 2013 at 5:15 pm

Thats a complicated one . I suggest you open a thread on our forum to discuss this matter – http://www.jagoinvestor.com/forum/

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564 E Pradeep July 31, 2013 at 11:48 pm

Would you have a capital gains tax calculator for SIPs? This is regarding some MF redemption that I had done in AY 2011-12 for which I have got a query from the IT Department now. I hadn’t paid any tax on the Short term and Long term (Investment had both Equity and Debt MFs) at that time due to lack of knowledge about it. I’d like to pay the appropriate tax now but do not know how to compute the capital gains. I have tried checking in CAMS/Karvy but none of them have the capital gains statement for transactions done 3 yrs back…

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565 Manish Chauhan August 5, 2013 at 1:30 pm

I suggest get in touch with a CA right now and get it done professionally

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566 Muthu Krishnan V August 24, 2013 at 6:56 pm

” either 10% with Indexation or 20% without Indexation for Long term Capital Gains .” It should be the other way round, 10% without indexation and 20% with indexation

Reply

567 Manish Chauhan August 29, 2013 at 11:30 am

Fixed

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568 Nipun September 24, 2013 at 11:58 am

Hi Manish,

Thanks for providing very fruitful and handy information on capital tax gain and respective calculator.

Need your advise….

I bought a house in under construction society in Apr 2005 and upfront paid the builder approx 29 lacs (Downpayment sceheme). In 2007 (Aug), before getting the possession, I paid approx 1 lac for parking, maintenance and other stuff. Also, I spent 2.5 lacs for registry (10% stamp duty). Please note that the total cost of property is 29 lacs out of which 25 lacs was for property cost and 4 lacs was provided to builder (as separate agreement) for internal furnishing, white washing, etc.. Registry was done on the 25 lacs and not 29 lacs.

Query
a) What should be the purchase year since i paid the full amount in CY2005 and posession was in 2007?
b) Also, i spent 29 lascs in CY2005 and approx 2.5 lacs including stamp duty, parking etc. Therefore, how should I do the indexing.
c) It would be good if you can provide me how to calculate and what will be the final capital gain in this case.

Reply

569 Manish Chauhan September 24, 2013 at 7:20 pm

Nipun

Can you open a thread on our forum for this – http://www.jagoinvestor.com/forum/

Reply

570 Nikhil Gadewal October 25, 2013 at 10:08 am

Dear Manish,
I own 2 flats. I am now investing in third flat as investor (No registration of flat will be done. It will be like an fixed deposit). I am paying 4 lakh and after 3 years builder will give back 8 lakh. So 8 lakh will be consider for capital gain tax?
If so, after 3 years I can save 8 lakh as Long term capital tax by investing on third flat. My second query is am I eligible to avail long term capital tax for third flat, if I already have 2 flats on my name?

Please reply to my queries as soon as possible by today.
Thanks,
Nikhil

Reply

571 Manish Chauhan October 26, 2013 at 9:22 am

There is no transaction like this approved and authorised . What documents will you get from builder on this ? Will it be shown as invetments in real estate ? If not, then its like 4 lacs was given and 8 lacs got back , So I am not sure how this taxation will happen . I think a better answer can be expected from our forum – http://www.jagoinvestor.com/forum

Reply

572 G Chakravarty November 1, 2013 at 5:25 pm

Hi Manish!
I sold a 2bHK last month to buy a 3HBK for my family needs. I bought the flat for about 10 lakh in 2008 (will be about 11.5 lakh including registration and stamp duties) and sold it in October 2013 for 32 lakh. So, how much will be my capital gain amount? 20/22 lakh roughly?
And, how soon do I need to invest that amount to be exempted from capital gains tax? Some say I need to invest the money in purchase of another flat within 6 months to be exempted from tax, some say the period is 1 year, while I read in most online forums that the window period is 2 years for investment in another flat. Which one is correct? Please help.
Also, my mother bought a small flat a few months ago for which I am a co-applicant in her house-building loan. If I repay the loan, will I get the benefit of capital gains tax exemption?

I will be very grateful to you for your kind assistance.

Thanks, Gangeyo

Reply

573 Manish Chauhan November 4, 2013 at 10:35 am

Note that its 2 years.. but if you dont do it before the financial year , then it gets complicated, because you cant just verbally say to tax department that you will use it in future . Then you will have to invest the money in capital tax bonds .. so either use it before the financial year or invest the money in capital gain tax bonds ..

Coming to your another query, you cant get exemption benefit on repaying your mother house loan , its only on purchase transaction as per my understanding !

Reply

574 uday January 8, 2014 at 5:40 pm

Manish,

Can the capital gain arrived from sale of two properties be clubbed together to get tax exemption while buying a new property?
e.g. I have sold one flat in Dec 2013. I am Planning to sale off second flat in April/May 2014. I am planning to buy a new flat in April/May 2014. Can I club the capital gain of these 2 sale proceeds (say 70 lacs together) to buy another flat ( say Rs 80 lacs) and still get the tax exemption? pls advise.

Also advise if capital gain arrived from sale of residential property be exempted if it is used to buy a commercial property ( an office space for self run business)?

Thanks in advance.
Uday

Reply

575 Manish Chauhan January 9, 2014 at 11:29 am

Yes, you can club it, but the tax availing will not be possible if you are buying commercial property ! . I suggest you also post it on our forum to get more suggestions – http://www.jagoinvestor.com/forum

Reply

576 uday January 11, 2014 at 9:39 am

Thanks a lot Manish.

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577 gsvirdi February 3, 2014 at 4:10 pm

Example given here is:
Purchase year is 2005 so it’s CII is 281. but how should we take when its bought in mar 2006??

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578 Yomesh February 13, 2014 at 5:01 pm

Hi Manish,

I am going to sell property “A”. By selling property “A”, My Capital gain comes around 10 Lacs (using Indexation technique).I have to repay remaining home loan(principle amount) around 8 Lacs taken for property “A”.
That means ,my net capital gain would be (10 Lac-8Lac) 2 Lacs.
I am going to invest this capital gain for purchase of new residential property.
Please let me know,the deduction of home loan principle from capital gain can be performed (as mentioned above)?

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579 Manish Chauhan February 14, 2014 at 4:19 pm

Hi Yomesh

It does not work like that, the principal amount you need to pay is totally not related to this, what you got after indexation (Rs 10 lacs) is what you need to pay tax on . The only way to save tax on this is if you use this money to buy another real estate.

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580 sharad March 12, 2014 at 4:34 pm

hi azeez,I had just got into an agreement to sell my flat which was bought in 2007. I m planning to complete the registration process in 1st week of april. pls guide me on the LTCG complications as I m getting the full consideration in white(no black money is involved). I had purchased the flat for 25lacs in 2007(registration date 18th sept 2007) and would be selling the flat in april 2014 for 67 lacs.so can you pls guide me the approx tax liability after taking into account the INDEXATION VALUE…..
Also guide me if i can use the loss of equity market to setoff my capital gain income from property…..

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581 Manish Chauhan March 12, 2014 at 4:47 pm

Hi Sharad, you can use the same formula to calculate the indexation value .. please do the calculation and paste it here .

You cant set off loss from equity with profit from capital gains .

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582 Rinku March 12, 2014 at 5:51 pm

Hi Manish,

I have a query… Incase I have picked up a property( residential) in 2010 and the property has been registered at the same time, the possession will be given next month ( April 2014) … and I sell the property immediately will it be calculated as LTCG or STCG????

Thanks
Rinku

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583 Manish Chauhan March 12, 2014 at 5:55 pm

It will be STCG

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584 Rinku March 12, 2014 at 6:09 pm

Thanks again! So basically for real estate the cap gains are always calculated from the day of possession…irrespective of when the agreement is registered n stamp duty paid?

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585 Manish Chauhan March 12, 2014 at 6:29 pm

Yes, Possession letter date , this is based on my current info !

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586 Dr.S.Sharma March 24, 2014 at 1:04 am

Dear Manish
I purchased a plot for Rs.300000 .00 in 1992. I did hold this plot. I booked a flat in 2011 in Jaypee greens costing 1.08 Cr. with loan from bank under subvention scheme. Bank financed me Rs. 80,00000.00 in 2011 and I spent Rs. 20,00000 Rest Rs. 8,00000.00 is to be paid at the time of possession some where within 2 yrs. from now. I took this loan of 80,00000 lacs with hope to sell my plot and return the loan to the bank. I had sold the plot this month for Rs.11000000.00 and returned the loan of Rs. 80,00000.00 to the bank. I had gone through the clauses of long term capital gain and consulted the CA also. I don’t own a house. Please let me know am I eligible for exemption of tax on my long term capital arising out of this sale of plot or not. My CA initially advised me that I can avail it but now he is in doubt. I am under great amount of worry regarding exemption under long term capital gain. Please advise.

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587 Manish Chauhan March 26, 2014 at 12:22 pm

Hi Shambhu

Can you open this question under our forum – http://www.jagoinvestor.com/forum

Manish

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588 Vinod Sharma March 25, 2014 at 3:55 pm

Hello Sir,

I have purchased house in 1989 of 45000 & I have spent 1500000 lakh on construction this year. If I sell this property I am getting 50 lakh INR. My question is should I add this construction cost under this property purchase amount to reduce tax burden? Which tax will apply, I mean with Indexation or without Indexation?

Please help me sir. Actually I am not getting properly about these two terms of Indexation/without indexation.

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589 Manish Chauhan March 26, 2014 at 12:05 pm

The calculation for capital gains tax in your case is not straight forward, you should better consult a good CA on this

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590 Vinod Sharma March 26, 2014 at 9:06 pm

thanks sir

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591 Raj March 27, 2014 at 5:55 am

Dear Manish… Thanks a lot for helping common people.. I need your help on deciding LT/ST and How is Indexing going to work in this case?
1. I booked a flat of 30L in Aug 2006 with downpayment 100% (10% mine + 90% Bank)
2. Got the possession + registration in Jan 2010
3. Sold the Flat of 43L in Jun 2012

Query:
1. Will it be ST or LT (which date can be considered for calculation)?
2. Will I get indexation benefit (which date can be considered)?
3. Is there any Taxable Gain in this deal?

Reply

592 Manish Chauhan April 10, 2014 at 4:30 pm

its going to be ST , you need to add it to ur income and pay tax

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593 P.Durgaprasad April 15, 2014 at 3:30 pm

Respected sir,
Its really good and more informative for the tax payers. kindly let me know the capital gain tax to be paid by my daughter and oblize.
My wife purchased a hose plot in A.P.State on31.1.1991 for Rs. 1,05,000/- and constructed a two rooms shed and living in it paying all the muncipal taxes. On 1.6.2006 the same property was ginen as gift to my daughter mentioning the property value as 9,37,500/- in registered gift deed. The same etire property was
sold by my daughter for 40,16000/- on 08.11.2013. how much capital gain tax to be paid by my daughter. kindly do me favour for this and oblize.
Thanking You,
Durgaprasad.P,Hyderabad,

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594 rupam manna April 16, 2014 at 5:18 pm

dear sir,

I have taken 1 bhk flat in dahanu road dist thane in financial year 2009-2010. builder hs made two agreement one property agreement for rs.800000/- and supplementary agreement for rs.450000/- and over and above i have spent rs.120000/- for rennovation. in the year 2010-2011

I have buyer and he is ready to buy the flat for rs.1500000/-. please let me know the capital gain for this case and and also want to know the supplementary agreement value will be considered in computing capital gain.

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595 Manish Chauhan April 21, 2014 at 1:51 pm

The purchase price will be considered as the REGISTERED value only . Based on that do the indexation as suggested in the article

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596 Manish Chauhan April 21, 2014 at 2:59 pm

The indexation has to be calculated on 10 lacs and then dedcated from 40 lacs, that will be the capital gains !

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597 Vinod Sharma April 22, 2014 at 6:15 pm

Hi Sir,

I have one question, Sir If I pay my tax on capital gain 20%, So can I use this money for personal use, I mean can I invest this money in Fixed deposit or any other deposit in banks.

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598 Manish Chauhan April 30, 2014 at 10:35 am

Yes

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599 Vinod Sharma April 30, 2014 at 12:30 pm

Thanks.

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600 rekha J June 10, 2014 at 6:30 pm

I bought a site in 1992 for 2,00,000 and now want to sell it and invest in an apartment. apartment will be completed only in 2019 and we have to pay the price in equal installments till then. will I be able to save on capital gain tax since the new property will be registered only after 3 yrs of selling the old property.
thanks and regards,
rekha

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601 Manish Chauhan June 10, 2014 at 8:11 pm

Yes, you can still save the capital gains part .. better you talk to a CA and get this all done ..

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602 TANAY SAHA July 17, 2014 at 1:46 pm

i have purchased a residential land on 30.06.2011 and have sold on 16.07.2014. it will be considered as short term capital gain or long term capital gain .

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603 Yugesh July 30, 2014 at 6:59 pm

Hi,

I get a rental income share of abt 55000/- per month through my mother from the houses/offices let out ( Since property and rental agreement is in her name). My mother is paying income tax on the above rentals through TDS. She gives me my share of rent by way of cheque. Whether this is again taxable under me. Please confirm. Then it becomes double taxation. Pl confirm at the earliest

Regards

Yugesh

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604 Vijay August 12, 2014 at 1:18 pm

1) I bought a commercial shop in year 2012. If I sell Can LTCG from sale of a commercial shop be used to buy a residential house, in order to save tax on LTCG. or do I need to purchase another commercial shop only

2) Currently I am having NRI status from last 5 years so will the tax computation be same as resident or will be there be any difference

Regards
Vijay

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605 Wriju Bharadwaj August 15, 2014 at 12:42 am

Hi Manish, (Sorry I know I am double posting but did not get a reply last time)

Could you please indicate the Income Tax Act/Section which clarifies this rule of 10% and 20% (or states that the assessee can choose etc.)? I am asking for this because I got 3 different responses from 2 tax consultants and 1 chartered accountant (10, 20 and believe it or not the CA insisted 30%). That’s where I got confused; also I was browsing through jagoinvestor forum

http://www.jagoinvestor.com/forum/capitals-gain-indexation-query

It looks like someone replied to a similar query saying that
———————————————–
“The option of paying tax at 10% without indexation is only available in the case of financial assets like mutual funds and the like; it is not available in the case of immovable property – for property, the tax has to be calculated at 20.6% post indexation”
———————————————–
An old post from 2011, but got me concerned nonetheless.

Thanks and Regards

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606 premjit dutta September 15, 2014 at 4:39 pm

I am selling a flat @6500000/= in 2014 which I have purchased @650000 in 2004 in mumbai. what will be the capital gain?According to capital gain calculator it is coming approximately 29000/=.Is it correct?

Reply

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