Hot Deal Capital gain important question

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Deal Cadet
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Friends my senior citizen relative is selling his property after 17 years. capital gain tax is 70000. profit is 6 lac. does he need to put all profit money in government bond to exempt from tax?which bond to be exact? he lives on interest income and has no job. if he does not put money in government bond then his profit 6 lac will be added to his interest income?

new zealand and many advanced countries have no capital gain tax

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RECL NHAI

For exact tax calculation u need to approach a CA because there must be indexation benefit and also indexed cost of improvement if any renovation done in the house. Ltcg is taxed at 20% but if there is slot available in basic exemption limit then this gain fits there.
Overall good amount of calculations are required so better consult a CA he may also help you with other investment options in 80c if that works out

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i forgot to show sale of property in 2018 which i bought on 2006 can i show it now?

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deadguru wrote:

i forgot to show sale of property in 2018 which i bought on 2006 can i show it now?

Show before the tax man reminds you

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@kukdookoo new Zealand and many advance country have any other facilities and drawbacks as well….. So don’t compare just for the sake of it…..

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long term capital gain should be invested in buying in other residential property (we will get the exemepton under 54 and 54f)
If u want invest in NHAI OR REC bonds for period of 5 years ( if withdraw investment withdraw investment with ij 5 years then we need pay tax )

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Tjs15 wrote:

RECL NHAI

For exact tax calculation u need to approach a CA because there must be indexation benefit and also indexed cost of improvement if any renovation done in the house. Ltcg is taxed at 20% but if there is slot available in basic exemption limit then this gain fits there.
Overall good amount of calculations are required so better consult a CA he may also help you with other investment options in 80c if that works out

thanku sirg. what is recl? how n from where to purchase bonds of recl and nhai?how are they taxed, lockin period and interest rate?
it is simple piece of land with no renovation. this website is showing tax at 10%
https://imgur.com/a/l...b1
what are other investment options in 80c? and say his profit from sale is 60000 then will it be added to his interest income in his total income slab?

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suplex_city wrote:

long term capital gain should be invested in buying in other residential property (we will get the exemepton under 54 and 54f)
If u want invest in NHAI OR REC bonds for period of 5 years ( if withdraw investment withdraw investment with ij 5 years then we need pay tax )

thanku sirg. what is recl? how n from where to purchase bonds of recl and nhai?how are they taxed, lockin period and interest rate?

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myfungang829 wrote:

@kukdookoo new Zealand and many advance country have any other facilities and drawbacks as well….. So don’t compare just for the sake of it…..

sirg no country is perfect but nz is better than india sorry to say. zero corruption, less taxes and overall better std of living

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What is diff b/w section 54 and 54 f?
article say that the exemption under Section 54 is available on long-term Capital Gain on sale of a House Property. Exemption under Section 54F is available on long-term Capital Gain on sale of any asset other than a House Property. https://cleartax.in/s/section-54-capital-gains-...
but below mentioned table in same article mentions residential property. where is section 54 f used for?

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the seller has 2 years to invest money in new residential property from the date of sales. if for some reason the seller does not do that then can the seller deposit the same amount as capital gains tax after or within 2 years?or can the seller deposit the amount in bonds within 2 years he is unable to cancels the plan to purchase a new property?

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kukdookoo wrote:

thanku sirg. what is recl? how n from where to purchase bonds of recl and nhai?how are they taxed, lockin period and interest rate?
it is simple piece of land with no renovation. this website is showing tax at 10%
https://imgur.com/a/l...b1
what are other investment options in 80c? and say his profit from sale is 60000 then will it be added to his interest income in his total income slab?

I guess the this calculation isn’t right. Also date of sale is april’21 ?
You may refer
https://www.bankbazaar.com/tax/capital-gains-ta...

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kukdookoo wrote:

What is diff b/w section 54 and 54 f?
article say that the exemption under Section 54 is available on long-term Capital Gain on sale of a House Property. Exemption under Section 54F is available on long-term Capital Gain on sale of any asset other than a House Property. https://cleartax.in/s/section-54-capital-gains-...
but below mentioned table in same article mentions residential property. where is section 54 f used for?

Yes exactly right.
I have no idea about how to invest in NHAI bonds
But it is not good idea to invest in nhai or rec bonds because they offer very low interest (lessthan 6%) and locking period is 5 year or more

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suplex_city wrote:

Yes exactly right.
I have no idea about how to invest in NHAI bonds
But it is not good idea to invest in nhai or rec bonds because they offer very low interest (lessthan 6%) and locking period is 5 year or more

where is section 54f used then?
Then should one pay tax

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Did u calculate the profit using the indexed cost or is it using original cost?

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kukdookoo wrote:

the seller has 2 years to invest money in new residential property from the date of sales. if for some reason the seller does not do that then can the seller deposit the same amount as capital gains tax after or within 2 years?or can the seller deposit the amount in bonds within 2 years he is unable to cancels the plan to purchase a new property?

can the seller show sale after 2 yr. in it return

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Tjs15 wrote:

I guess the this calculation isn’t right. Also date of sale is april’21 ?
You may refer
https://www.bankbazaar.com/tax/capital-gains-ta...

The sale might be in March or April, depends upon buyer
Is this link incorrect? https://www.moneycontrol.com/personal-finance/t... Any calculator which take into effect indexation too?
Indexation tax deposit date=ITR date?

The seller has 2 years to invest money in new residential property from the date of sales. if for some reason the seller does not do that then can the seller deposit the same amount as capital gains tax after or within 2 years?or can the seller deposit the amount in bonds within 2 years he is unable to cancels the plan to purchase a new property?

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Maverickz wrote:

Did u calculate the profit using the indexed cost or is it using original cost?

Calculated from here https://www.moneycontrol.com/personal-finance/t...

Purchase value 176500 (22500 stamp duty included) in 2004 in either March or April. Sale value for 825000 Sale will happen this month or next.

Mai aapko tag karne hi vala tha

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For calculating capital gains tax on sale of property, you will have to mandatorily take benefit of indexation and calculate tax @ 20% on such indexed profit. In your case, the tax is getting calculated in the range of 67-72k (based on the indexed profit of Rs. 3.35 to 3.6 lacs)… Further, if the senior citizen’s income before Capital gains is less than the minimum exemption limit ( i.e. 3 lacs for Sr. Citizen in 60-80 age and 5 lacs in 80+ age bracket), then capital gains will be reduced to the extent of the shortfall in minimum exemption limit. You can check your case and decide.

Thus the profit to be reinvested is around 3.35 to 3.6 lacs and not 6 lacs as originally stated by you. You can bring down that profit further, if you are incurring costs in relation to that sale such as brokerage or commission or traveling etc. In case, there were certain improvements done to the property during the period of holding, those also can be claimed as deduction with indexation benefit.

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Step1- first we have to calculate cost of acquisitions. It includes brokerage , commission paid etc.
Step- 2- Then we have to calculate index cost of acquisitions. Year in which asset acquired is called base year. It will be calculated to year in which property sold. ie if acquired in 2002 then we have take 2002 as base year.
Step 3- Fair market value or sell price whichever is higher will be taking as selling price. And that price will be deducted by cost of acquisitions.
Step 4- any excess amount that come(after deducting sale based expense) is called taxable long term capital income as holding period is more.
Step 5- 20 percent is tax rate for long term capital gain.

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Kakarrot wrote:

Step1- first we have to calculate cost of acquisitions. It includes brokerage , commission paid etc.
Step- 2- Then we have to calculate index cost of acquisitions. Year in which asset acquired is called base year. It will be calculated to year in which property sold. ie if acquired in 2002 then we have take 2002 as base year.
Step 3- Fair market value or sell price whichever is higher will be taking as selling price. And that price will be deducted by cost of acquisitions.
Step 4- any excess amount that come(after deducting sale based expense) is called taxable long term capital income as holding period is more.
Step 5- 20 percent is tax rate for long term capital gain.

OP, read my reply carefully along with the above.

1)For tax purpose, the tax is calculated on the sale deed values.

Sale deed value while buying the property, get this from the sale deed, RsX
Sale deed value while selling the property, get this from the new sale deed, RsY

2)Cost of the acquisition : Z = Y – X + registration charges for X + brokerage charges for X
3)Now do the indexing for Z.
4)At the end there will be loss instead of profit, hence no tax (for most of the REs).

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Maverickz wrote:

For calculating capital gains tax on sale of property, you will have to mandatorily take benefit of indexation and calculate tax @ 20% on such indexed profit. In your case, the tax is getting calculated in the range of 67-72k (based on the indexed profit of Rs. 3.35 to 3.6 lacs)… Further, if the senior citizen’s income before Capital gains is less than the minimum exemption limit ( i.e. 3 lacs for Sr. Citizen in 60-80 age and 5 lacs in 80+ age bracket), then capital gains will be reduced to the extent of the shortfall in minimum exemption limit. You can check your case and decide.

Thus the profit to be reinvested is around 3.35 to 3.6 lacs and not 6 lacs as originally stated by you. You can bring down that profit further, if you are incurring costs in relation to that sale such as brokerage or commission or traveling etc. In case, there were certain improvements done to the property during the period of holding, those also can be claimed as deduction with indexation benefit.

Thank u sirg. please clear two important questions, how u calculate indexed profit of 3.35 to 3.6 lakh? Is there any calculator for it?
please explain this line
Further, if the senior citizen’s income before Capital gains is less than the minimum exemption limit ( i.e. 3 lacs for Sr. Citizen in 60-80 age and 5 lacs in 80+ age bracket), then capital gains will be reduced to the extent of the shortfall in minimum exemption limit.

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Kakarrot wrote:

Step1- first we have to calculate cost of acquisitions. It includes brokerage , commission paid etc.
Step- 2- Then we have to calculate index cost of acquisitions. Year in which asset acquired is called base year. It will be calculated to year in which property sold. ie if acquired in 2002 then we have take 2002 as base year.
Step 3- Fair market value or sell price whichever is higher will be taking as selling price. And that price will be deducted by cost of acquisitions.
Step 4- any excess amount that come(after deducting sale based expense) is called taxable long term capital income as holding period is more.
Step 5- 20 percent is tax rate for long term capital gain.

thanku sirg how to calculate step 2 and 3

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ramadesidime wrote:

OP, read my reply carefully along with the above.

1)For tax purpose, the tax is calculated on the sale deed values.

Sale deed value while buying the property, get this from the sale deed, RsX
Sale deed value while selling the property, get this from the new sale deed, RsY

2)Cost of the acquisition : Z = Y – X + registration charges for X + brokerage charges for X
3)Now do the indexing for Z.
4)At the end there will be loss instead of profit, hence no tax (for most of the REs).

sirg how to do indexing for z?

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kukdookoo wrote:

sirg how to do indexing for z?

Suppose you bought a property of rs 1000 on 2000-01. Then base year for the same would be 2000-1. And index of that base base would be 100.
And sell property in 19-20, then index of that year would be 289. Therefore index cost of acquisitions will be 289/100*1000 ie 2890 will be cost of acquisitions as on date of sale(sale happen in 19-20). Note there is different values for different year.

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