Hot Deal Capital gain important question

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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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Calculation of Long Term Capital Gains as under:

1. Sale Value 825000
2. Less: Indexed Cost of Acquisition 487400
(176500 / 109 [Index for FY 2003-04] * 301 [Index for FY 2020-21])
3. Capital Gains 337600

So if the senior citizen has total interest income of Rs. 2 lacs and if his age is between 60 to 80, then his minimum exemption limit is Rs. 3 lacs, so for him the taxable capital gains will be 237600 (i.e. 337600 less 100000 [3 lacs minimum exemption less 2 lacs interest income]

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@Maverickz @Kakarrot @ramadesidime
Thank you sir’s for all your help. A little correction purchase date April 2004 amount 176500. Sale date will be in April next month FY 2021-2022. Where is cost inflation index for this year? Taking 301 of FY 2020-2021 just for the sake of clarity
176500/113 * 301= 470146.01/-
Purchase value as per indexation=470146.01/-
Capital Gains= 825000-470146.01= 354853.99
LTCG tax= 20%
So, C.G. tax= 70970.79/-
Is the above calculation correct sirg?

@Maverickz sir for this line one question
if the senior citizen has total interest income of Rs. 2 lacs and if his age is between 60 to 80, then his minimum exemption limit is Rs. 3 lacs, so for him the taxable capital gains will be 237600 (i.e. 337600 less 100000 [3 lacs minimum exemption less 2 lacs interest income]
you said minimum exemption is 3 lacs. is it besides 80c limit and 80TTA? I am confused with this line?

last few doubts
a. is capital gains tax added with interest income or is it treated separately?
b. supposse a person does not deposit capital gain tax in 6 months and within 2 years seller’s mind changes that he does not want new property then will he have to deposit interest with capital gain tax?
c. supposse sales deed and amount is transferred on 1st april then within 6 months from 1st april seller needs to deposit tax amount?
d. nhai and recl bonds give 5% interest which is paid annually. It is treated as simple interest. does it make sense in terms of opportunity cost if seller deposits capital gain tax on the last day and till the time invest the tax money and the rest of it somewhere else which pays more than 5%?
e. brokerage etc. will be deducted from the capital gains amount, right?

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kukdookoo wrote:

@Maverickz @Kakarrot @ramadesidime
Thank you sir’s for all your help. A little correction purchase date April 2004 amount 176500. Sale date will be in April next month FY 2021-2022. Where is cost inflation index for this year? Taking 301 of FY 2020-2021 just for the sake of clarity
176500/113 * 301= 470146.01/-
Purchase value as per indexation=470146.01/-
Capital Gains= 825000-470146.01= 354853.99
LTCG tax= 20%
So, C.G. tax= 70970.79/-
Is the above calculation correct sirg?

@Maverickz sir for this line one question
if the senior citizen has total interest income of Rs. 2 lacs and if his age is between 60 to 80, then his minimum exemption limit is Rs. 3 lacs, so for him the taxable capital gains will be 237600 (i.e. 337600 less 100000 [3 lacs minimum exemption less 2 lacs interest income]
you said minimum exemption is 3 lacs. is it besides 80c limit and 80TTA? I am confused with this line?

last few doubts
a. is capital gains tax added with interest income or is it treated separately?
b. supposse a person does not deposit capital gain tax in 6 months and within 2 years seller’s mind changes that he does not want new property then will he have to deposit interest with capital gain tax?
c. supposse sales deed and amount is transferred on 1st april then within 6 months from 1st april seller needs to deposit tax amount?
d. nhai and recl bonds give 5% interest which is paid annually. It is treated as simple interest. does it make sense in terms of opportunity cost if seller deposits capital gain tax on the last day and till the time invest the tax money and the rest of it somewhere else which pays more than 5%?
e. brokerage etc. will be deducted from the capital gains amount, right?

.

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kukdookoo wrote:

@Maverickz @Kakarrot @ramadesidime
Thank you sir’s for all your help. A little correction purchase date April 2004 amount 176500. Sale date will be in April next month FY 2021-2022. Where is cost inflation index for this year? Taking 301 of FY 2020-2021 just for the sake of clarity
176500/113 * 301= 470146.01/-
Purchase value as per indexation=470146.01/-
Capital Gains= 825000-470146.01= 354853.99
LTCG tax= 20%
So, C.G. tax= 70970.79/-
Is the above calculation correct sirg?

@Maverickz sir for this line one question
if the senior citizen has total interest income of Rs. 2 lacs and if his age is between 60 to 80, then his minimum exemption limit is Rs. 3 lacs, so for him the taxable capital gains will be 237600 (i.e. 337600 less 100000 [3 lacs minimum exemption less 2 lacs interest income]
you said minimum exemption is 3 lacs. is it besides 80c limit and 80TTA? I am confused with this line?

last few doubts
a. is capital gains tax added with interest income or is it treated separately?
b. supposse a person does not deposit capital gain tax in 6 months and within 2 years seller’s mind changes that he does not want new property then will he have to deposit interest with capital gain tax?
c. supposse sales deed and amount is transferred on 1st april then within 6 months from 1st april seller needs to deposit tax amount?
d. nhai and recl bonds give 5% interest which is paid annually. It is treated as simple interest. does it make sense in terms of opportunity cost if seller deposits capital gain tax on the last day and till the time invest the tax money and the rest of it somewhere else which pays more than 5%?
e. brokerage etc. will be deducted from the capital gains amount, right?

Answers to your doubts:

1. No deduction u/s 80C to 80U is allowed to be claimed against LTCG. However, if there is any other income other than LTCG, u can claim the same and reduce the taxable first and then claim the benefit of basic exemption to lower the LTCG.

Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

2. Capital gains tax is computed separately. Capital Gains is added with any salary, other income, but the tax rate is fixed irrespective of the person’s tax slab.

3. Section 54 till 54XXX lays down guidelines for claiming exemptions for all Capital Gains. One of those guidelines allows you to claim exemption by allowing the tax payer to invest the CG amount in any property or bonds etc. However, please note that you will be required to claim the deduction in the income tax return of the year in which the capital gains were generated. In your case, it would FY 2021-22, if your asset is sold in April 2021. For claiming exemption by investing in bonds, u have to invest the CG within 6 months from the date of transfer and also ensure that it is claimed in the ITR. So, if u sell the property in March 2021, you will have to invest by the return due date or September 2021, whichever is earlier. However, if u want to claim exemption by opting to purchase another property, the same also needs to be done before the time of filing your return for FY 2021-22 (i.e July 2022 – assuming no extension). If u are not able to invest in new property, then you will have to mandatorily deposit the CG amount in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.

3. CG Tax needs to be paid alongwith advance tax after the quarter in which the CG was generated in equal installments in the balance quarter. In your case, if the asset is sold in April 2021, the CG tax can be paid in equal installments as advance tax in Q2, Q3 and Q4 or can pay it fully in Q2 itself. There is no rule of 6 months to pay the CG tax.

4. It will be your decision to invest in the NHAI / REC Bonds or pay tax considering the cost benefit you get.

5. Brokerage etc on sale of asset and indexed brokerage cost at the time of purchase can be claimed as deduction from capital gains amount.

I hope all your doubts are now cleared.

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i forgot to show sale of property in 2018,can i show it now?

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deadguru wrote:

i forgot to show sale of property in 2018,can i show it now?

There are many who forget to show it permanently joy joy joy

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kukdookoo wrote:

@Maverickz @Kakarrot @ramadesidime
Thank you sir’s for all your help. A little correction purchase date April 2004 amount 176500. Sale date will be in April next month FY 2021-2022. Where is cost inflation index for this year? Taking 301 of FY 2020-2021 just for the sake of clarity
176500/113 * 301= 470146.01/-
Purchase value as per indexation=470146.01/-
Capital Gains= 825000-470146.01= 354853.99
LTCG tax= 20%
So, C.G. tax= 70970.79/-
Is the above calculation correct sirg?

@Maverickz sir for this line one question
if the senior citizen has total interest income of Rs. 2 lacs and if his age is between 60 to 80, then his minimum exemption limit is Rs. 3 lacs, so for him the taxable capital gains will be 237600 (i.e. 337600 less 100000 [3 lacs minimum exemption less 2 lacs interest income]
you said minimum exemption is 3 lacs. is it besides 80c limit and 80TTA? I am confused with this line?

last few doubts
a. is capital gains tax added with interest income or is it treated separately?
b. supposse a person does not deposit capital gain tax in 6 months and within 2 years seller’s mind changes that he does not want new property then will he have to deposit interest with capital gain tax?
c. supposse sales deed and amount is transferred on 1st april then within 6 months from 1st april seller needs to deposit tax amount?
d. nhai and recl bonds give 5% interest which is paid annually. It is treated as simple interest. does it make sense in terms of opportunity cost if seller deposits capital gain tax on the last day and till the time invest the tax money and the rest of it somewhere else which pays more than 5%?
e. brokerage etc. will be deducted from the capital gains amount, right?

>>
A little correction purchase date April 2004 amount 176500.
Sale date will be in April next month FY 2021-2022, amount 825000.
>>

OP, I have a feeling/assuming that you did not read my below reply carefully. No govt in India has increased the registration values at the rate 12% per year for the last 20 years.

https://www.desidime.com/discussions/capital-ga...

Edit: Get the latest registration values from registrar office before assuming this value(Sale date will be in April next month FY 2021-2022, amount 825000).
You cannot register your property for some vague value.

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ramadesidime wrote:

>>
A little correction purchase date April 2004 amount 176500.
Sale date will be in April next month FY 2021-2022, amount 825000.
>>

OP, I have a feeling/assuming that you did not read my below reply carefully. No govt in India has increased the registration values at the rate 12% per year for the last 20 years.

https://www.desidime.com/discussions/capital-ga...

Edit: Get the latest registration values from registrar office before assuming this value(Sale date will be in April next month FY 2021-2022, amount 825000).
You cannot register your property for some vague value.

sirg i did not get this line OP, I have a feeling/assuming that you did not read my below reply carefully. No govt in India has increased the registration values at the rate 12% per year for the last 20 years.

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Maverickz wrote:

Answers to your doubts:

1. No deduction u/s 80C to 80U is allowed to be claimed against LTCG. However, if there is any other income other than LTCG, u can claim the same and reduce the taxable first and then claim the benefit of basic exemption to lower the LTCG.

Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

2. Capital gains tax is computed separately. Capital Gains is added with any salary, other income, but the tax rate is fixed irrespective of the person’s tax slab.

3. Section 54 till 54XXX lays down guidelines for claiming exemptions for all Capital Gains. One of those guidelines allows you to claim exemption by allowing the tax payer to invest the CG amount in any property or bonds etc. However, please note that you will be required to claim the deduction in the income tax return of the year in which the capital gains were generated. In your case, it would FY 2021-22, if your asset is sold in April 2021. For claiming exemption by investing in bonds, u have to invest the CG within 6 months from the date of transfer and also ensure that it is claimed in the ITR. So, if u sell the property in March 2021, you will have to invest by the return due date or September 2021, whichever is earlier. However, if u want to claim exemption by opting to purchase another property, the same also needs to be done before the time of filing your return for FY 2021-22 (i.e July 2022 – assuming no extension). If u are not able to invest in new property, then you will have to mandatorily deposit the CG amount in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.

3. CG Tax needs to be paid alongwith advance tax after the quarter in which the CG was generated in equal installments in the balance quarter. In your case, if the asset is sold in April 2021, the CG tax can be paid in equal installments as advance tax in Q2, Q3 and Q4 or can pay it fully in Q2 itself. There is no rule of 6 months to pay the CG tax.

4. It will be your decision to invest in the NHAI / REC Bonds or pay tax considering the cost benefit you get.

5. Brokerage etc on sale of asset and indexed brokerage cost at the time of purchase can be claimed as deduction from capital gains amount.

I hope all your doubts are now cleared.

thank u sirg. can u please explain final two points

For claiming exemption by investing in bonds, u have to invest the CG within 6 months from the date of transfer and also ensure that it is claimed in the ITR. So, if u sell the property in March 2021, you will have to invest by the return due date or September 2021, whichever is earlier. However, if u want to claim exemption by opting to purchase another property, the same also needs to be done before the time of filing your return for FY 2021-22 (i.e July 2022 – assuming no extension). If u are not able to invest in new property, then you will have to mandatorily deposit the CG amount in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.

CG Tax needs to be paid alongwith advance tax after the quarter in which the CG was generated in equal installments in the balance quarter. In your case, if the asset is sold in April 2021, the CG tax can be paid in equal installments as advance tax in Q2, Q3 and Q4 or can pay it fully in Q2 itself. There is no rule of 6 months to pay the CG tax.

point 1 example Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

Assume sale date is Apri’21l then assume last date to file itr (non audit for senior citizens) is 31st october’22. Can the seller deposit capital gain tax on the date of filing of itr i.e. 31st october’22 or is it mandatory to pay as advance tax in installments as u mentioned? Without computing income how will one know the exact tax to be deposited as taxable income etc. is calculated while filing itr only? this senior citizens interest income is less than 5 lacs so no advance tax is paid.

are you sure there is no provision to deposit capital gain tax within 6 months from the date of sale? within how many months after sale one need to invest in new property to save tax?

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Maverickz wrote:

Answers to your doubts:

1. No deduction u/s 80C to 80U is allowed to be claimed against LTCG. However, if there is any other income other than LTCG, u can claim the same and reduce the taxable first and then claim the benefit of basic exemption to lower the LTCG.

Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

2. Capital gains tax is computed separately. Capital Gains is added with any salary, other income, but the tax rate is fixed irrespective of the person’s tax slab.

3. Section 54 till 54XXX lays down guidelines for claiming exemptions for all Capital Gains. One of those guidelines allows you to claim exemption by allowing the tax payer to invest the CG amount in any property or bonds etc. However, please note that you will be required to claim the deduction in the income tax return of the year in which the capital gains were generated. In your case, it would FY 2021-22, if your asset is sold in April 2021. For claiming exemption by investing in bonds, u have to invest the CG within 6 months from the date of transfer and also ensure that it is claimed in the ITR. So, if u sell the property in March 2021, you will have to invest by the return due date or September 2021, whichever is earlier. However, if u want to claim exemption by opting to purchase another property, the same also needs to be done before the time of filing your return for FY 2021-22 (i.e July 2022 – assuming no extension). If u are not able to invest in new property, then you will have to mandatorily deposit the CG amount in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.

3. CG Tax needs to be paid alongwith advance tax after the quarter in which the CG was generated in equal installments in the balance quarter. In your case, if the asset is sold in April 2021, the CG tax can be paid in equal installments as advance tax in Q2, Q3 and Q4 or can pay it fully in Q2 itself. There is no rule of 6 months to pay the CG tax.

4. It will be your decision to invest in the NHAI / REC Bonds or pay tax considering the cost benefit you get.

5. Brokerage etc on sale of asset and indexed brokerage cost at the time of purchase can be claimed as deduction from capital gains amount.

I hope all your doubts are now cleared.

sir getting confused with the below explanation, please help

Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

Assume interest income from fd- 3.5lac
80c+mediclaim- 1.6lac
Capital Gains- 3.54lac
now can you once again explain how will the deductions of 2 lac and 87a work here. I got confused and thinking that 2 lac deduction is applied to both 3.5lac and 3.54lac

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kukdookoo wrote:

thank u sirg. can u please explain final two points

For claiming exemption by investing in bonds, u have to invest the CG within 6 months from the date of transfer and also ensure that it is claimed in the ITR. So, if u sell the property in March 2021, you will have to invest by the return due date or September 2021, whichever is earlier. However, if u want to claim exemption by opting to purchase another property, the same also needs to be done before the time of filing your return for FY 2021-22 (i.e July 2022 – assuming no extension). If u are not able to invest in new property, then you will have to mandatorily deposit the CG amount in deposit account in any branch of a nationalized bank in accordance with Capital Gain Account Scheme 1988.

CG Tax needs to be paid alongwith advance tax after the quarter in which the CG was generated in equal installments in the balance quarter. In your case, if the asset is sold in April 2021, the CG tax can be paid in equal installments as advance tax in Q2, Q3 and Q4 or can pay it fully in Q2 itself. There is no rule of 6 months to pay the CG tax.

point 1 example Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

Assume sale date is Apri’21l then assume last date to file itr (non audit for senior citizens) is 31st october’22. Can the seller deposit capital gain tax on the date of filing of itr i.e. 31st october’22 or is it mandatory to pay as advance tax in installments as u mentioned? Without computing income how will one know the exact tax to be deposited as taxable income etc. is calculated while filing itr only? this senior citizens interest income is less than 5 lacs so no advance tax is paid.

are you sure there is no provision to deposit capital gain tax within 6 months from the date of sale? within how many months after sale one need to invest in new property to save tax?

Due date for income tax return is normally 31-July, unless extended. Since the person in your case is a Senior Citizen and assuming with residential status as resident and no income from business or profession, he can pay income tax anytime before ITR filing. I do not know other details about the senior citizen in question, hence suggested advance tax to be on the safer side. Senior citizens are exempt from advance tax subject to the conditions mentioned earlier.

There is no requirement to deposit CG related income tax within 6 months of sale.

For the time frame to purchase another property from the capital gains, it can be either 1 year before the sale or 2 years after the sale or 3 years in case your are constructing the property.

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deadguru wrote:

i forgot to show sale of property in 2018,can i show it now?

can anyone help?

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kukdookoo wrote:

sir getting confused with the below explanation, please help

Eg. If the senior citizen (being ordinarily resident) has non-LTCG income of Rs. 3 lacs (Interest Income + Salary) and also has deductions u/s 80C to 80U of Rs. 2 lacs (PPF, Mediclaim, Interest on Savings Bank), then his taxable income excluding LTCG would be Rs. 1 lacs. As per your example, if he has earned Rs. 3.54 lacs as capital gains, then he would be able to adjust Rs. 2 lacs out of this Rs. 3.54 lacs in the basic exemption limit of Rs. 3 lacs and the balance Rs 1.54 lacs would be subject to LTCG @ 20% – Thereby tax of Rs. 0.30 lacs. Further, since the person total taxable income is less than 5 lacs (Here in your case Rs. 4.54 lacs, he will also be eligible for relief of Rs. 12500 under section 87A, thereby reducing the tax liability to Rs. 17500.

Assume interest income from fd- 3.5lac
80c+mediclaim- 1.6lac
Capital Gains- 3.54lac
now can you once again explain how will the deductions of 2 lac and 87a work here. I got confused and thinking that 2 lac deduction is applied to both 3.5lac and 3.54lac

In the case mentioned by you, the total non-CG income is 3.5 lacs, there after deduction of section 80 allowables of 1.6 lacs, you will have 1.9 lacs as taxable income.

Since the person is a senior citizen in 60 – 80 years range, his basic exemption limit is 3 lacs and his total  income (excluding CG) as calculated above is 1.9 lacs, so there is scope of another 1.1 lacs to reach the basic exemption of 3 lacs.

This 1.1 lacs can be reduced from your CG of 3.54 lacs, thereby bringing it down to 2.44 lacs for tax calculation purposes and tax of Rs. 0.49 lacs. However, in your case, your total income (1.9 lacs + 3.54 lacs = 5.44 lacs) is above 5 lacs, u cannot  claim 0.125 lacs as rebate under section 87A

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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?

Please consult CA to take informed decision -

As per new tax reforms in 2021. Taxman can open file for last 3 years. So as per govt, I think after march this year or march next year. So tax should be paid for 3 years or you got lucky to not pay any taxes (which might be illegal)

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InvestPotato wrote:

Please consult CA to take informed decision -

As per new tax reforms in 2021. Taxman can open file for last 3 years. So as per govt, I think after march this year or march next year. So tax should be paid for 3 years or you got lucky to not pay any taxes (which might be illegal)

any CA here?

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InvestPotato wrote:

I think you have successfully evaded this tax and might not need to pay this tax.

what if i get notice?

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Maverickz wrote:

Due date for income tax return is normally 31-July, unless extended. Since the person in your case is a Senior Citizen and assuming with residential status as resident and no income from business or profession, he can pay income tax anytime before ITR filing. I do not know other details about the senior citizen in question, hence suggested advance tax to be on the safer side. Senior citizens are exempt from advance tax subject to the conditions mentioned earlier.

There is no requirement to deposit CG related income tax within 6 months of sale.

For the time frame to purchase another property from the capital gains, it can be either 1 year before the sale or 2 years after the sale or 3 years in case your are constructing the property.

thanku sirg. sale will be in fy 21-22 in april’21 so due date for same is in july’22. safer to pay capital gain tax in july’22? Senior citizen 62 years age no income from anything just interest income.
When will it department release indexation value for financial year 21-22?

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Maverickz wrote:

In the case mentioned by you, the total non-CG income is 3.5 lacs, there after deduction of section 80 allowables of 1.6 lacs, you will have 1.9 lacs as taxable income.

Since the person is a senior citizen in 60 – 80 years range, his basic exemption limit is 3 lacs and his total  income (excluding CG) as calculated above is 1.9 lacs, so there is scope of another 1.1 lacs to reach the basic exemption of 3 lacs.

This 1.1 lacs can be reduced from your CG of 3.54 lacs, thereby bringing it down to 2.44 lacs for tax calculation purposes and tax of Rs. 0.49 lacs. However, in your case, your total income (1.9 lacs + 3.54 lacs = 5.44 lacs) is above 5 lacs, u cannot  claim 0.125 lacs as rebate under section 87A

In the case mentioned by you, the total non-CG income is 3.5 lacs, there after deduction of section 80 allowables of 1.6 lacs, you will have 1.9 lacs as taxable income.

Since the person is a senior citizen in 60 – 80 years range, his basic exemption limit is 3 lacs and his total income (excluding CG) as calculated above is 1.9 lacs, so there is scope of another 1.1 lacs to reach the basic exemption of 3 lacs.

This 1.1 lacs can be reduced from your CG of 3.54 lacs, thereby bringing it down to 2.44 lacs for tax calculation purposes and tax of Rs. 0.49 lacs. However, in your case, your total income (1.9 lacs + 3.54 lacs = 5.44 lacs) is above 5 lacs, u cannot claim 0.125 lacs as rebate under section 87A

Interest income- 3.5 lacs-1.6(deductions)= 1.9 lacs
Basic exemption limit remaining- 3-1.9= 1.1 lacs
C.G.= 3.54 lacs
Reduced C.G.= 3.54-1.1= 2.44 lacs
LTCG on CG= 2.44×20%= 48800
Is final tax calculated right sirg?

Considering opportunity cost and considering nhai and recl pay only 5% simple interest. Paying tax seems good choice rather than investing whole 2.44 lacs in bonds?
Please note that out of 2.44 lacs 8000 might more be reduced if property dealer agrees to accept brokerage in cheque. He is forcing to pay cash.

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InvestPotato wrote:

Please consult CA to take informed decision -

As per new tax reforms in 2021. Taxman can open file for last 3 years. So as per govt, I think after march this year or march next year. So tax should be paid for 3 years or you got lucky to not pay any taxes (which might be illegal)

sirg pichle 6 saal ki limit nahi thi shayad

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if i have ltcg from property and no other income and my ltcg is less than taxable income still i have to file itr?

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deadguru wrote:

what if i get notice?

sirg ya to kismat pe chod do agar notice aya to ca se setting karva lena ya agli return mein dikha do.

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deadguru wrote:

if i have ltcg from property and no other income and my ltcg is less than taxable income still i have to file itr?

Yes, you have to file and pay tax on capital gains, even if the gains are less than taxable income.

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kukdookoo wrote:

thanku sirg. sale will be in fy 21-22 in april’21 so due date for same is in july’22. safer to pay capital gain tax in july’22? Senior citizen 62 years age no income from anything just interest income.
When will it department release indexation value for financial year 21-22?

Yes.. it can be paid in July 2022 since the person is a senior citizen and qualifying the conditions for not paying advance tax. Tax calculation is also correct, only 4% cess / surcharge needs to be added to the tax amount. Index for FY 2021-22 will be released by June 2021.

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deadguru wrote:

if i have ltcg from property and no other income and my ltcg is less than taxable income still i have to file itr?

Filing income tax returns is mandatory for individuals with income of more than Rs 2.5 lakh. It is recommended that you file your income tax return, even though it is not mandatory if total income isn’t over Rs 2.5 lakh. This can be referred to as nil income tax return filling. A nil income tax return can be filed to show the Income Tax Department that you fall below the taxable income and therefore did not pay taxes during the year.

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1cooldesidd wrote:

Yes, you have to file and pay tax on capital gains, even if the gains are less than taxable income.

Both the statements related to filing ITR and paying capital gains is not true…if the person does not have any any income other than LTCG which is below the basic exemption limit.

In case you are a resident for the purpose of income tax and your total income as reduced by various deductions is below the basic exemption limit, you are entitled to set off your STCG and LTCG from equity products and LTCG of non-equity products against the short fall in your basic exemption. Since his LTCG is less than the basic exemption and does not have any other income, he can setoff his entire LTCG against the shortfall in the basic basic exemption limit and then also his total taxable income will be less than the basic limit, thereby allowing to pay nil tax and not file IT returns. However, it is recommended to file a nil tax ITR as it can be of help in future while applying for loans etc.

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kukdookoo wrote:

In the case mentioned by you, the total non-CG income is 3.5 lacs, there after deduction of section 80 allowables of 1.6 lacs, you will have 1.9 lacs as taxable income.

Since the person is a senior citizen in 60 – 80 years range, his basic exemption limit is 3 lacs and his total income (excluding CG) as calculated above is 1.9 lacs, so there is scope of another 1.1 lacs to reach the basic exemption of 3 lacs.

This 1.1 lacs can be reduced from your CG of 3.54 lacs, thereby bringing it down to 2.44 lacs for tax calculation purposes and tax of Rs. 0.49 lacs. However, in your case, your total income (1.9 lacs + 3.54 lacs = 5.44 lacs) is above 5 lacs, u cannot claim 0.125 lacs as rebate under section 87A

Interest income- 3.5 lacs-1.6(deductions)= 1.9 lacs
Basic exemption limit remaining- 3-1.9= 1.1 lacs
C.G.= 3.54 lacs
Reduced C.G.= 3.54-1.1= 2.44 lacs
LTCG on CG= 2.44×20%= 48800
Is final tax calculated right sirg?

Considering opportunity cost and considering nhai and recl pay only 5% simple interest. Paying tax seems good choice rather than investing whole 2.44 lacs in bonds?
Please note that out of 2.44 lacs 8000 might more be reduced if property dealer agrees to accept brokerage in cheque. He is forcing to pay cash.

@Maverickz
sirg please clear this last doubt also.

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kukdookoo wrote:

@Maverickz
sirg please clear this last doubt also.

Final Tax calculation is correct. 4% cess also needs to be added to arrive at the final tax amount. For claiming the exemption under section 54EC, u will have to invest the entire capital gains earned of Rs. 3.54 lacs and Rs. 2.44 on which tax is getting calculated.

If there is an actual opportunity available wherein u get more returns, then u can consider investing in the same considering your risk appetite. Or if there is no actual opportunity available, 5% simple interest (through REC / NHAI Bonds) is a good choice as the current yearly rates offered by leading banks are also in the same range.

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Maverickz wrote:

Final Tax calculation is correct. 4% cess also needs to be added to arrive at the final tax amount. For claiming the exemption under section 54EC, u will have to invest the entire capital gains earned of Rs. 3.54 lacs and Rs. 2.44 on which tax is getting calculated.

If there is an actual opportunity available wherein u get more returns, then u can consider investing in the same considering your risk appetite. Or if there is no actual opportunity available, 5% simple interest (through REC / NHAI Bonds) is a good choice as the current yearly rates offered by leading banks are also in the same range.

sir you mean investing 3.54 lacs and not 2.44 lacs?
shukriya aapka

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