When and How much tax will be paid on sale of Property?

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  1. kksh

    kksh New Member

    Hello,
    I am selling a 200 sq m under constructed house which was registered in 2006. It is sold in 72.5 lac and the circle rate is of 74 lac. Means registration will be of 74 lac. Buyer will give me the TDS certificate of 74k.
    I am planning to invest this amount in another ready to move property

    Am I still liable to pay tax?

    Please help me out with my query.

    Thank you
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    If you reinvest the gains which arise on the sale of this property, you can claim exemption from payment of tax on the capital gains.

    If the amount invested by you in the new residential property is more than the capital gains arising on the sale of the old property - then no tax is required to be paid.

    However, if the amount invested by you in the new residential property is less than the capital gains arising from the sale of the old property - then capital gains tax @ 20% is required to be paid.

    This exemption can be claimed under section 54. For more details on this, kindly refer this link - http://www.charteredclub.com/section-54/
     
  3. kksh

    kksh New Member

    How the gain is calculated? is it based on circle rate-selling rate or the selling rate-invested amount ?
    Can I use the amount of two residential property in buying a single ready to move property?
     
  4. kksh

    kksh New Member

    This site has very useful and ready to use information. Excellent I was struggling to find relevant information on such topic. Great..
    Thanks a lot. Awaiting your valuable input/advice on above query.
     
  5. gaurav_kumar

    gaurav_kumar Well-Known Member

    The higher of the following will be assumed to be the Selling Price and Capital Gains calculated accordingly:-
    1. Selling Price
    2. Value as per Circle Rates
    Yes, you can sell 2 properties and buy 1 property and claim exemption.

    However, you cannot sell 1 property and then buy 2 properties and claim exemption.

    Feel free to ask in case of any other queries.
     
  6. kksh

    kksh New Member

    How much is capital gain in this case.
    Selling price is 7250000
    Circle rate is 7400000
    Cost was around 2000000 (2006)
     
  7. gaurav_kumar

    gaurav_kumar Well-Known Member

    The Cost of Acquisition will first be indexed to account for increase in value as a result of inflation. The Indexed Cost of Acquisition will be 20 Lakhs* 1024/519 = 39.46 Lakhs

    In this case, as the Circle Rate is more than the Selling Price - therefore the Circle Rate will be assumed to be the Selling Price.

    Therefore Capital Gains = 74L - 39.46L = 34.54 Lakhs
     
  8. kksh

    kksh New Member

    Thank you very much. I will take some of your more valuable time.
    1. Only capital gain amount will be deposited in capital gain account? I guess no the whole amount.
    2. what if I deposit whole amount in my normal saving account? And than buy a residential ready to move property out of that money.
     
  9. gaurav_kumar

    gaurav_kumar Well-Known Member

    As the property that has been sold by you was held for more than 3 years, therefore Capital Gains Tax @ 20% would be levied in this case.

    20% of 34.54L = 6.90 Lakhs

    However, in case you purchase a Residential Property or invest in Specified Bonds - you can claim exemption from payment of Capital Gains Tax
     
  10. gaurav_kumar

    gaurav_kumar Well-Known Member

    You can keep this amount in your normal savings account till 31st July 2015.

    However in case you don't reinvest before 31st July 2015 - in that case you will have to deposit this amount in the capital gains account scheme.

    You only have to deposit the amount of capital gains and not the whole sale proceeds in the capital gains account scheme
     
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