Long Term Capital Gains Tax

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  1. K.Periaswamy

    K.Periaswamy New Member

    Dear Sirs,

    On sale of a house property held on for around 10 years, the entire sale proceeds can be put/credited into an existing savings bank account initially or a separate account has to be opened.
    If the capital gain portion is utilised in purchasing a new house property within the stipulated time by the law after putting the entire sale proceeds into the existing SB account, is there any need to open a capital gain account and is there any need to file IT returns.

    please explain in detail

    Thank you,
     
  2. V K Khanna

    V K Khanna Active Member

    Law does not authorise you to credit capital gain amount in the saving bank account for utilisation within in the stipulated period so as to qualify for deduction u/S 54.

    If you are unable to utilise the Capital gains before filing the return, you would need to deposit the amount in the Capital Gain Account to avoid tax or else pay LTCG tax and then file the return.
     
    Last edited: Mar 4, 2016
  3. K.Periaswamy

    K.Periaswamy New Member

     
  4. K.Periaswamy

    K.Periaswamy New Member

    Dear Sir,

    Thank you very much for your reply

    I need some more clarifications as under:-

    In your above reply, it was not clear to me whether the entire sale proceeds should be credited to a separate account or only the capital gains portion (i.e. Total sale proceeds - Indexed cost of acquisition) has to be credited because the total sale proceeds includes both Indexed cost of acquisition plus capital gains. In case, the capital gains portion has to be credited to a separate account, whether the Indexed cost of acquisition amount out of the total sale proceeds can be credited to an existing SB account.

    What is is time limit for crediting both the amounts into the respective accounts initially and the time limit for their withdrawal?.

    To arrive at the indexed cost of improvement of a particular house property, what are the documentary proofs needed. Since the period of holding is a long and the seller of the property does not have the documentary proof, what is the way out to calculate the indexed cost of improvement of a property and all other miscellaneous expenses incurred towards acquisition and improvement?.

    Please explain and kindly send reply to me on my email.

    Thank you,

    K.Periaswamy
     
  5. K.Periaswamy

    K.Periaswamy New Member

    Dear Sir,

    In the sale of a house property which attracts Long Term Capital Gains and the value is around Rs.90 lacs whether the purchaser of the above property has to pay/deduct 1% TDS and as proof of having deducted and duly paid he has to give a receipt to the seller.

    Whether this 1% deduction of TDS by the purchaser has to be reduced from the total sale proceeds and the balance amount paid to the buyer and whether this (1% TDS deduction) can be adjusted against the total Long term capital gains arising out of the sale of house property.

    How the above will impact the seller, if the seller constructs/purchases a house property within the stipulated time by the law, whether he is entitled to claim refund of the 1% TDS paid by the purchaser on his behalf.

    Please clarify and enlighten me on all other aspects on this subject.

    Thank you,

    K.Periaswamy
     
  6. V K Khanna

    V K Khanna Active Member

    If you are seeking deduction under S 54, only capital gain would need to be deposited in the capital gain deposit scheme. In case the deduction is under S 54F, entire sale proceed would be deposited in the Capital Gain Deposit Scheme.
    2. As already explained, the amount has to be deposited in the Capital Gain Deposit Scheme before filing the return. Till such time the return is filed, you are free to retain the amount in the saving bank account.

    3. If the property was purchased prior to 1.4.1981 you can get the property valued through a Govt Approved Valuer as on 1.4.1981 and thereafter apply indexation benefits to arrive at its indexed cost of acquisition. If you have documentary evidence towards cost of improvement, this could also be added towards the total cost of acquisition along with indexed benefits

    4.The buyer of property has to deduct TDS @1% if the total cost of the property purchased is more than Rs 50 lakh. The buyer will furnish TDS certificate in Form 16B to the seller on the basis of which the seller can claim adjustment of taxes paid or refund due in his return of income.
     
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