This is however subject to the following conditionsĪ)The purchase of property should be done either 1 year prior to selling the property or within two years of the sale.ī) In case of under construction property, the same should be done within maximum three years from the transfer date of the earlier property.Ĭ)The newly acquired property cannot be further sold within 3 years of purchase or construction.ĭ) The newly acquired property should be located in India. Section 54 : If the sale proceeds of a residential property are further utilized to buy another residential property, the capital gains on the sale proceeds are exempt. Get FREE Credit Report from Multiple Credit Bureaus Business income is taxed at slab rate but you can claim various expenses as deduction from it. However sale of a flat by a professional builder, will be taken as business income. For example, sale of a flat by a salaried bank accountant will trigger capital gains. The asset sold by you must be a capital asset and not ‘stock-in-trade.’ Stock in trade refers to business inventory held by a trader/dealer/manufacturer etc. For example, the profit made by a professional stock market traded will be treated as business income rather than capital gains. For LTCG/STCG to apply, the transfers must not be part of your business and profession.Under the Income Tax Act, transfers by way of inheritance, gift between family members and partition of HUF are not taxable transfers. For capital gains to arise, there must be a taxable transfer.It can be set off against Long Term Capital Gains in future years. Long Term Capital Loss can be carried forward for up to 8 years since the year in which it was incurred. However short term capital loss can be set off against Short Term Capital Gain and Long Term Capital Gain. Long Term Capital Loss can only be set off against Long Term Capital Gain. For example if you made a profit of Rs 20 lakh on selling house A but made loss on selling house B, only the net profit is taxed. LTCG on one asset can be set off against LTCG or Long Term Capital Loss on another asset. **Indexed cost of improvement = A X (B / C), wherein,Ĭost of transfer is the brokerage paid for managing the deal, cost of advertising plus legal expenses incurred etc. *Indexed cost of acquisition = A X (B / C), wherein Long-term capital gain = A-(B+C+D), whereas,Ī=Full value of consideration received or accruingĭ= cost of expenditure incurred wholly and exclusively in connection with such a transfer The actual formula for LTCG calculation is as follows: Hence even though you have made a gain of Rs 50, your actual tax is not 20% of Rs 50 or Rs 10 but rather only Rs 2.8 after applying indexation. The tax payable will be 20% of 14 = Rs 2.8. As a result your purchase price for tax purposes will rise to (272/200)*100 = 136 and your taxable gain will be 150 – 136 = 14. The Cost Inflation Index (CII) in FY 13 was 200 and the CII in FY 18 was 272. Since you have sold it after three years, the gain is long term and a tax of 20% with indexation will apply. For example assume that you buy a debt fund (growth option) in 2013 for Rs 100 and sell it in 2018 for Rs 150. Indexation reduces tax liability to take inflation into account. While computing LTCG, except for LTCG in stocks/equity funds, indexation is taken into account. Note that indexation benefit is given to gold, debt funds, land, flats, real estate and other assets for LTCG calculation but not to equity mutual funds and stocks LTCG Calculation
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |