Advance Tax on capital Gain/sale of Property

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  1. Ashok Parekh

    Ashok Parekh New Member

    Dear Mr Khanna & Mr Chawla, Thank you for joining the matter. I think I have not been able to present my query properly. I am trying again. The Long Term Capital Gain may be Rupees 1,20,00,000 after depositing in REC an amount of Rs 50 Lakhs, and the Income from rent and interest etc may be 5,00,000. Thus the total amount will be 1,25,00,000. But I propose to deposit Rs 30,00,000[Thirty Lakhs] as Capital Gain Deposit in Nationalised Bank thus reducing the total to 95,00,000. Will I have to pay Surcharge of 10% over and above the Income tax because the ORIGINAL LTCG was One Crore Twenty Lakhs. Please note I am a senior citizen so it takes a little more time to understand. Ashok
  2. V K Khanna

    V K Khanna Active Member

    Dear Mr Parekh,
    First of all I am very sorry for a casual response I gave in my earlier reply. I had a relook on the issue and find that after depositing 30 lakh in Capital Gain Saving Account,your total income inclg. income from other sources comes to 95 lakh and therefore provision of surcharge of 10% will not be attracted.
    By clubbing income from other sources with Capital Gain, pl be clear that you will not be taxed at your slab rate. The overall tax liability will be determined as per the provisions of Sec 112(1) which says that the basic exemption limit of 3 lakh (for senior citizens) shall first be allowed against total income, as reduced by the amount of long term capital gain and the balance, if any, shall be allowed against such long term capital gains. That is, where the total income as reduced by the
    long term capital gain, is below Rs 3 lakh then the amount of long term capital gains chargeable to tax shall be reduced by the amount by which the total income so reduced falls short by the amount of Rs 3 lakh.
    Now in your case how your tax liability works out is explained as under
    LTCG. 90 l
    Total Income 95 l ( including 5 l from other sources)
    90 l - ( 3l - (95l - 90l)
    90l - ( 3l - 5l)
    90l + 2l
    92l tax @ 20%. ==18.4l
    Cess @3% = .552L
    Total tax payable: 18.552L
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