Payment of Capital Gains Tax on Real Estate Transaction

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  1. Rajiv Malhotra

    Rajiv Malhotra New Member

    I have sold a plot and would like to know when I have to pay advance tax for the share of Capital Gains I have earned on the above mentioned sale.
    If I sell the plot say on 7th March 2014 by which date I have to deposit advance tax for the Capital Gains earned on the sale proceeds.
    I purchased the plot in January 2006 and would like to sell in March 2014
    Cost of Aquisition : Rs.10,00,000.00
    Stamp Duty : Rs.60,000.00
    Maintainence Charges paid yearly : Rs.1250.00 per year for 8 years

    Total Cost : 10,70,0000.00

    Please guide me the exact value of Capital Gains earned and the tax payable and by which date it has to be paid
     
  2. VAIBHAV DILIP RANE

    VAIBHAV DILIP RANE Active Member

    Capital Gain will be (Sales Consideration) less (Cost of Acquisition + Improvement cost if any).
    It will be Long Term Capital Gain, and taxed @ 20%

    * Please note you can't add "Maintenance Charges" paid by you, as it is Revenue in nature, it does not improve life of assets.
    * You can inflate your cost of acquisition, by using CII,. so your Tax will be reduce

    If you sell the Plot till end of this March 2014, than advance tax should be paid before 15-03-2014.
     
    Last edited: Feb 28, 2014
  3. Naresh Sadasivan

    Naresh Sadasivan New Member

    Hi Vaibhav,

    Thanks for the post . However i didn't understand "* You can inflate your cost of acquisition, by using CII,. so your Tax will be reduce " I am also in the process of selling my property in April so in this case when should i pay the advance tax???

    Please advise

    Thanks in advance

    /NS
     
  4. VAIBHAV DILIP RANE

    VAIBHAV DILIP RANE Active Member



    CII - means, Cost Inflation Index,... It implies the Increasing Inflation Rates, e.g. on Property over the period of time.

    For E.g. :-

    If property purchased for Rs. 100,000 in 2001-02,. and same has been sold for Rs. 10,00,000 in 2013-14. Than Capital Gain comes to Rs. 900,000 in normal course.

    However if we use "CII,.. than in 2001-02 CII was 426 and in 2013-14 CII is 939,... this show inrcease in Inflation Index,

    So, in 2001-02 CII was 426 property value was Rs. 100,000... thus in 2013-14 CII is 939, so what is Property Value ?

    You can cross multiply it,... and Ans we get is Rs. 220,423

    Hence now Capital Gain is Rs. 779,577 /-

    Means Tax Saved Rs. 24,086 /-

     
  5. VAIBHAV DILIP RANE

    VAIBHAV DILIP RANE Active Member

    If you are going to Sell property in April 2014,... than Tax on LTCG to be paid Before- 15th September 2014.

    * Please note- While selling the property tell your Buyer to Deduct TDS @ 1% on Sale Consideration and than remit the net amount.

    Please Refer - https://www.tin-nsdl.com/TDS/TDS-FAQ.php
     
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