Latest Expert Exchange Queries
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) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: VAT Audit :: TDS :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT RATES :: cpt :: empanelment :: due date for vat payment :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: articles on VAT and GST in India :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4%
 
 
News Headlines »
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act
 Have you got interest on your income tax refund?

Exemptions in capital gains tax while investing in residential property
January, 05th 2008
With surplus cash in hand, it is not uncommon for many salaried individuals and businessmen to invest in residential property. They dispose it off when the value of the property appreciates significantly. These transactions entail short-term or long-term capital gains tax on the profits made.

SHORT-TERM CAPITAL GAINS TAX

If the house owned by an individual is sold within 36 months of purchase, short-term capital gains tax is applicable. When computing shortterm capital gains tax, the gains are added to the total taxable income of the individual. The gain in this case is the difference between the cost of purchase and the sale value of the asset. It is then taxed at the relevant tax slabs.

LONG-TERM CAPITAL GAINS TAX

If the house owned by an individual is held for a minimum of 36 months from date of purchase, long-term capital gains tax is applicable. Longterm capital gains are taxed at a flat rate of 20% irrespective of your income slab.

However, tax benefits are available under Section 54 of the IT Act. This tax can be avoided by re-investing the profits in another residential property if either of these conditions are satisfied - a fully constructed residential property is purchased within a period of one year before the sale or two years after the sale, or if you construct a residential property on your own within a period of three years after the sale. In case of capital gains tax, you must be aware that only the profits earned from the sale proceeds need to be re-invested . The profits can be reinvested in a new residential property. You can still borrow money for the construction/purchase of the new property and use the sale proceeds of the old property for other purposes.

DEPOSITS IN SCHEMES

Long-term capital gains on sale of a house can be deposited under a Capital Gains Scheme of any authorised bank before the due date for filing of return of income. This may not be relevant for sellers who have already invested the entire capital gains in another house, subject to conditions. The amount deposited here is considered to have been used for the purchase or construction of the new house. If the amount you have deposited is not used for buying a new house within a period of three years, the amount will be treated as long-term capital gains of the previous year.

HOW CAPITAL GAINS IS ARRIVED AT

Vignesh purchased a house in the year 1992 for Rs 15 lakhs. In the year 2000, He spent Rs 5 lakhs on home improvement. The property was sold off in the year 2006 for Rs 60 lakhs. He incurred Rs 2 lakhs expenditure as transaction fees. Here's how his tax outflow towards capital gains on sale of the house is arrived at.

Long-term capital gains is computed by deducting from the full value of the consideration, the expenditure incurred in connection with the transfer, the indexed cost of acquisition, and the indexed cost of improvement.
 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Bath SEO Company Birmingham SEO Company Bradford SEO Company Brighton and Hove SEO Company Bristol SEO Company Cambridge SEO Company Canterbury SEO Company Carlisle SEO Company Chester SEO Company Chichester SEO Company Coventry SEO Compan

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