capital gains proceeds

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    MEENA KINI New Member

    Greetings! I have taken a loan on my Fix dep with a bank to pay advance amount for my property to be purchased.n sale of my existing property can i use the amount under capital gains to repay the loan amount on the FDR's to get them released.Please let me know where i get details of capital gains so that i dont have to put up a query everytime THX MK
  2. T Venkata Ramam

    T Venkata Ramam New Member

    I am planning to sell my DDA flat. This flat has been purchased in 1984 and possession has been made in 11-10-1989 by DDA after paying the final payment of Rs 252000.00. I made improvements to the flat to the tune of Rs 250000.00. Now in 2016 I plan to sell the same for Rs17000000.00.
    1. It falls under long term capital gains tax.
    2. The options with me is
    a) to pay capital gains tax on the net amount at 20%+ surcharge at 15% and clear the tax as I do not intend to purchase another house /. flat in the country.
    b) the other option is to deposit the entire amount of sale proceedings in the Capital gains account scheme for three years and pay tax on the interest at the normal rates and withdraw the amount after three years of locking period.

    Now it may be advised whether I have to pay tax at 20%+ surcharge even after the locking period of three years or so. Which is a better option of the above. Please clarify.

    [email protected]
    TV Ramam
  3. James Joseph

    James Joseph New Member

    Step 1. Check whether you have a surplus (capital gain) on the property transaction
    Step 2. If there is a capital gain it is subject to tax. Otherwise it should be reinvested (as per the provisions). For eg. sales 100 purchase 80 capital gain 20.
    Step 3. Technically the amount raised from sale of 1st property is used for purchasing second property. If the full sale proceeds of the 1st property is used for settlement of loan (if in the same year itself), capital gain may not be there.
    Note: Using money for repaying any loan is not a matter for tax computation.
  4. James Joseph

    James Joseph New Member

    I would suggest the option 1.
    You have a chance to invest the money in some thing more productive
    No lock in period
    Both case you have to pay tax on interest
    Since there is no intention to reinvest better to opt option 1
  5. V K Khanna

    V K Khanna Active Member

    Pl note that the investment in capital gain account scheme, if not utilised for the purpose for which it was kept in the account, is not tax free. If you withdraw the amount from the scheme after three years, you will be liable to pay capital gain tax first.

    2. The better option for you is to invest in the Capital gain bonds under Sec 54 EC to save tax. The maximum amount that can be invested is Rs 50 lakh and the time limit for investment is six months from the sale of the previous property. The principal amount invested in bonds is tax free on maturity after lock in period of three years. Interest accrued annually on the amount invested will however be taxable in your hands.
    tjs likes this.
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