Income Tax on Selling Under Construction Property

POSTED BY Sharad Sharma ON January 18, 2013 8:47 am COMMENTS (4)

Hi,

 

I have booked an under construction property in July, 2011 and paid approx 7 Lacs by self and approx 24 Lacs by home loan, also approx 1 Lacs by self for service tax.


In Jan, 2013 I sold the property before possession with same sale consideration in which I have purchased it. Buyer paid 24 Lacs directly to home loan bank and 7 Lacs (installment money) + 1 Lacs (service tax money) directly to my bank account.


Details for 01/04/2011 to 31/03/2012

————————————————-

PRINCIPAL COMPONENT Rs. 16,522

INTEREST COMPONENT Rs. 1,31,925

PRE-EMI INTEREST Rs. 4,439


Details for 01/04/2012 to 31/03/2013

————————————————-

PRINCIPAL COMPONENT Rs. 26,567

INTEREST COMPONENT Rs. 1,65,109

PRE-EMI INTEREST Rs. 490

Principal Prepayment at fully disbursed stage Rs. 23,64,566

Simple Interest on Prepayment Rs. 15,537


Please guide me on following 3 queries,


1. How should I show the details for 7 Lacs (installment money) + 1 Lacs (service tax money) in my income tax declaration for 2012-2013 year and do I need to pay any taxes on this sell of property?


2. I have taken the 80C principal component benefits for 2011-2012 year and how can I reverse it now and how should I show it in income tax declaration for 2012-2013 year?


3. Can I take any kind of income tax benefits on home loan interest (nearly 3 Lacs) paid in both the year via EMIs? If yes, how?


Please assist me.

4 replies on this article “Income Tax on Selling Under Construction Property”

  1. Dear Angan, please read section 80C & notify us where it’s written that possesion is required to claim tax benefit for principal repayment. Yes for interest benefit, possession is a pre condition under section 24(b).

    Please do not say, I have heard so or read somewhere. Please read the section 80C in the official website of Income Tax & then only comment here.

    I w’d be happy to correct myself. 🙂

    Thanks

    Ashal

  2. angan chandra says:

    i can not understand how can you took 80C benefit for U/C flat. For U/C flat one can not take any tax benefit whether principal amount or interest amount. The interest portion can be claimed after the possession in 5 equal installment for next 5 years & principal portion can be claimed only after possession only.

  3. Sharad Sharma says:

    OK 🙁

    Thanks Ashal for the details..

  4. Dear Sharad, let me understand your query.

    you purchased the u/c property for 32L Rs. & now within 2Y (roughly) even without availing possession of the property, you have sold out for same 32L Rs.

    Well as the sell price & purchase price are same, the question of any short term capital gains does not arise.

    You can not avail any tax benefit on the interest paid towards home loan during this period.

    The 80c benefit availed by you for FY 2011-2012, ‘ll be reversed now. The income which was adjusted for tax saving ‘ll be added back to your income in the current FY.

    Thanks

    Ashal

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