Capital Gain Tax

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  1. praveenn

    praveenn New Member

    Dear Sir,

    Myself & my mother jointly inherited a property from my Grand Mother, last Nov 2015.
    We sold this property in June 2016.

    This is a very old property ( earlier than 1960) which belonged to my grandfather, which was inherited by my Grand mother in 1980s.

    My query is on how to save capital gains tax
    1) is the tax calculated on the entire amount of property sale or only the profit gained.
    2) Should i invest entire amount or only the profit gained to save on capital gain tax
    3) Should iinvestment be on a residential property or bonds only
    4) Can i invest this in a agricultural land.

    Please advise.
  2. ZED

    ZED Well-Known Member

    It will be on CAPITAL GAIN. We will have to compute capital gain as per provisions of S.48. The capital gain would be less than the profit because of the indexation effect.

    It will depend upon the provision(s) under which the exemption is to be claimed.
    u/s 54 , only capital gain needs to be invested;[buy/construct house]
    u/s 54F ,entire net sales consideration needs to be invested;[buy/construct house]
    u/s 54EC , only capital gain needs to be invested; [bonds]
    u/s 54GB ,entire net sales consideration needs to be invested; [create a co.]

    Can be on both also. Please do refer the provisions which I have cited to ensure that none of the conditions is violated.

    Exemption might not be available.
    Exemption is available only if the asset transferred was an urban agricultural land.

    Capital gain is very vast, I suggest you take proper consultancy if you are not vell versed with the provision.
    Also note, you will need to fair market value of asset as on 01.04.1981
  3. 1. you have to invest only capital gain arising on sale of asset

    2. it is enough to invest to the extent of capita gain (beyond that optional at your discretion)

    3. in case your sold property is residential you have to go for investment in residential property u/s 54,
    in case if it is otherthan residential you may go for investment in residential property
    u/s 54F,
    irrerspective of type of asset (long term) you may go for investment in bonds u/s 54EC.

    4. no, you are not eligible to invest in Investment in agri. land u/s 54B is only towards sale of agri land.

    note: sub provisons of IT Act.
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