sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
Direct Tax »
 Three reasons to file income tax returns on time
  New direct tax code may have to wait until 2019
 Direct tax collection grows fastest in 7 years in FY18, courtesy GST; here’s how indirect tax reform helps
 Income Tax: Deadline for filing belated ITR of Assessment Year 17-18 is over
 Income Tax department cautions TDS deductors, says file statements by May 31 or pay penalty
 ITR-4 launched on e-filing portal; total 3 ITRs available now
 CBDT directs income tax department to hold grievance redressal fortnight for taxpayers in June
 Income tax return form-2 in Java format released for e-filing for FY2017-18
 3 ITRs available now ITR-4 launched on e-filing portal
 Businesses, small taxpayers to gain from new direct tax code
 New direct tax code to benefit corporates, income tax payers

Tax on capital gain depends on period of holding the asset
October, 09th 2015

I am a citizen of New Zealand, but own a piece of land in Gujarat in India, which was purchased when I was a citizen of India, in 1985. But I now want to sell it. Will there be any capital gains tax, and who will bear the tax burden?

As per the Indian tax law, income earned from sale of property situated in India attracts capital gain tax irrespective of nationality and residential status of an individual.

Tax on capital gain varies basis its period of holding. If the capital asset is held for 36 months or less, the same will be considered as a short-term capital asset and hence, taxable on normal tax rates. If the capital asset is held for more than 36 months, the same will be considered as a long term capital asset and incur long term capital gain (LTCG).

In your case, as the land (considering it is non-agricultural) is held for more than 36 months, the same will attract LTCG. The difference between the sale consideration and indexed cost of acquisition will be taxed in the hands of seller as LTCG at a 20% tax rate (plus surcharge and education cess) after indexation of cost to inflation. There are certain benefits available under the Indian tax law to reduce the burden of capital gain tax. The said benefits are available on making the following investments:

1) By investing the amount of capital gain in the bonds issued by Rural Electrification Corp. Limited or National Highway Authorities India within a period of 6 months after date of sale (maximum amount that can be invested is Rs.50 lakh in the year of sale and its succeeding year cumulatively)

b. By investing the sale proceeds in purchase of a residential house within one year prior to the sale or two years after the sale, or in construction of residential house within 3 years of sale. Further, in case the amount remain un-invested until the due date of filing of India tax return (i.e. 31 July), then there is an option to put the unutilised amount in a Capital Gains Account Scheme with a bank (not later than the filing India Income-tax Return) and subsequently withdraw this amount for re-investment.

However, with each of the above stated benefits, there are certain conditions attached such as lock in period, restrictions on sale of newly acquired asset, among other things. The above benefits can be availed only upon fulfilment of such conditions and provisions. As the capital gain would arise to the seller of property, the taxes on the same would need to be discharged by the seller herself. The tax on capital gains is required to be discharged by way of advance tax (if the total tax liability net –off tax deducted at source exceeds Rs.10,000) in three prescribed instalments (30% by 15 September, 60% by 15 December and 100% by 15 March).

In case the tax is not deposited as per the prescribed instalments, the same will need to be discharged by way of self-assessment tax along with applicable interest at the time of filing of India Income-tax Return.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Portal Design Website Design Portal Designing Website Designing Web Design Professional Portal Design Professional Website Design Professional Web Design Portal Design India Website Design India Portal Designing India Website Designing India Web Design India Professional Portal Design India Professional Website Design India Chicago Professional Web Design New York Professional Web Design California Website Design Florida Website Design New Jersey Website Design Britain UK Website Design London Manchester Website Design

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions