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
General »
 Government likely to withdraw tax notice on free banking services
 Senior Citizens Savings Scheme Rules, 2004
 How salaried individuals can avail full potential of I-T benefits
 The Central Board of Direct Taxes unveiled new Income Tax Return forms for assessment year 2018-19 on 5 April. Although the manner of filing returns remains the same as compared to last year, certain changes have been incorporated in the new ITR forms.
 Income Tax efiling: Must-do steps to file your IT return for FY 2017-18 on time till you get Form 16
 What are the tax filing deadlines for financial year 2017-18?
 How income tax department can penalise you for under-reporting, misreporting income
 Start your tax planning right now
 Government confident of meeting fiscal deficit, tax revenue targets
 Clarification with respect to the E-way Bill System
 Here is how you can save on taxes

Qurey Corner: Tax
April, 20th 2010

My husband had got ESOP, which was encashed in Jan this year. When checked with tax consultant, we were advised to pay tax@20%, else to save it. We have purchased a flat 2 years ago, hence even if we invest in home it will not be exempted from tax, is this true?  Madhuri

Assuming that the shares obtained through ESOP scheme were held for more than a year ago, the sale would give rise to long-term capital gains. If the shares so sold were issued by Indian company and STT was paid at the time of sale of such shares then long-term capital gains would be exempt from tax. If the shares so sold were issued by a foreign company then the gains are taxed at 20.6%.

In such case, you can claim exemption under Section 54F by reinvesting the amount of sale proceeds for purchase of a residential house within 2 years from the date of sale or for construction of residential house within 3 years from the date of sale. If you did not own more than one house at the time of sale of shares obtained under ESOP scheme, you would be eligible to claim exemption under Section 54F. Another option would be to claim exemption under Section 54EC by investing in REC/NHAI bonds within 6 months from the date of sale. The amount of long-term capital gains would then be exempt to the extent of such investment. Note that investment in REC/NHAI bonds cannot exceed Rs 50,00,000 per financial year. Interest earned on such investments is taxable.

I booked a flat in 2005. I have not yet taken possession of the flat. If I were to sell the flat and reinvest the entire sale proceeds into another flat, will there be any capital gains tax payable?

If you sell the flat before it gets ready, you can argue that you are actually selling a right in the flat (and not the flat itself as its still not ready ) which you acquired in 2005. And since the right was held for more than 3 years, the gain arising from sale thereof is in the nature of long-term capital gains.

Reinvestment of sale proceeds of this right into another residential house would qualify for tax exemption under Section 54F as long as you meet all the conditions prescribed therein. If you sell the flat after taking possession but before completion of three years from the date of possession, then it may be considered that the asset you are selling was held by you for less than three years and hence the gains arising from the sale thereof may be considered as short-term capital gains and no exemption from such gains are available on reinvestment. Counter arguments, though possible, may be avoided if option a) is feasible.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Organic SEO Outsourcing Organic Search Engine Optimization Outsourcing Organic Website SEO Organic SEO India Website SEO India Organic Search Engine Optimization India Organic Internet SEO India Organic Web

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