Long-term capital gain on sale of residential house is taxed at 20%

Written by Suresh Surana | Updated: Aug 12 2014, 08:18am hrs
I own two flats in Pune. One flat is used for residential purpose while the other has been let out. Is it necessary to incur some expenditure on repair and maintenance to claim 30% deduction while calculating income from house property

Yaresh Padgaokar

Section 24(a) of the Income-Tax Act allows a standard deduction of 30% of the net annual value. This deduction is automatic and does not depend on the quantum of actual expenditure incurred. It is allowed irrespective of the amount of expenditure incurred by the taxpayer. However, this deduction is not available for a selfoccupied property as the annual value in such a case will be nil.

I have not yet filed the return of income for FY13. However, my entire tax liability was covered by the TDS. Can I file the return now Do I need to pay any penalty

Amit Sood

You can file a belated return of income for FY13 at any time before the expiry of a year from the end of the relevant assessment year, i.e., up to March 31, 2015, or before the completion of assessment, whichever is earlier. If no tax is payable, you will not be liable to pay any interest for filing a belated return. However, a penalty of R5,000 may be levied under Section 271F by the tax authority if you fail to prove that there was a reasonable cause for the delay.

I am currently employed in a construction company. I have been provided a car (1200 cc) by the company. All expenditure on driver, petrol, repairs and maintenance is paid for by company. I am using the car for official as well as private purposes. What will be the value of perquisites

Abhay Kumar

In your case, the car is owned by the employer and all expenses are borne by him. Further, the car is partly used for official purposes and partly for private purposes. Thus, the perquisite value will be R2,700 per month (i.e., R1,800 per month for car plus R900 per month for driver/chauffeur).

My query is regarding computation of long-term capital gain on the sale of a residential house. I do not wish to claim indexation benefit and, thus, want to pay tax at 10%. Am I allowed to do so

Karan Gupta

The benefit of a lower rate of tax at 10% (without indexation) under the provision to Section 112 is restricted only to listed securities and doesn't apply to a residential house. Thus, you will be required to compute long-term capital gain after taking the benefit of indexation and pay tax at 20% on the resultant long-term capital gains.

I sold some jewellery that I purchased last year for a profit. What are the tax implications

Poonam Singh

The capital gain arising on the sale of jewellery is subject to capital gain tax as per the provisions of Section 45 of the Income-Tax Act. Since the jewellery has been held by you for not more than 36 months, it will be treated as short-term capital asset and capital gain arising from sale of such assets shall be regarded as short-term capital gain, taxable at the normal slab rate. You cannot claim reinvestment benefit under Section 54F and 54EC as these provisions are applicable only in the case of sale of a long-term capital asset. However, you can claim the benefit of Section 80C (life insurance premium, contribution to Public Provident Fund account, etc.) to reduce your tax burden.

n The writer is founder of RSM Astute Consulting Group

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