I am planning to sell one of my flats, which I had built four years ago, to a company. What would be the tax implications?
Ravinder Singh
The transfer of a flat, it being a capital asset, is subject to capital gains tax in the hands of the transferor. As the flat has been held by you for more than 36 months, the gain on its transfer will be treated as long-term capital gain, taxable at 20% plus applicable surcharge and education cess. Further, the benefit of indexation will be available. Under section 50C, if the sale consideration is less than the stamp duty value of the flat, then the stamp duty value will be considered as full value of consideration for the purpose of calculating capital gain. Reinvestment benefit under Section 54 can be availed.
Recently, the Finance Bill 2013 proposes to impose an obligation on the buyer of an immovable property to pay tax at 1% where the total amount of consideration is R50 lakh or more. Accordingly, the company will be required to pay tax either at the time of making the payment or credit, whichever is earlier, at 1%.
Is it true that maturity proceeds of a key man insurance policy, which is assigned to a person during the term of the policy, is now taxable?
Mukesh Gupta
Yes, the Finance Bill 2013 proposes to provide that the benefit of exemption under Section 10(10D) will also be not available in respect of a key man insurance policy, which has been assigned to any person during its term with or without consideration. Such policies shall continue to be treated as a key man insurance policy and the maturity proceed received by the employee would be taxable as profit in lieu of salary. This amendment is proposed to be effective from FY14.
I am a salaried employee working in private limited company. My annual salary income is R15 lakh. I have been filing my tax returns manually. Can I file the return manually for FY12?
Atul Kumar
As per the CBDT notification dated March 28, 2012, if an individual?s total annual income exceeds R10 lakh, he will be required to furnish the returns for FY12 and subsequent years electronically, either under digital signature or without any digital signature and, thereafter, submit the verification of the return in Form ITR-V. Thus, you will be required to file the returns for FY12 electronically.
During Fy13, I spent a certain amount on repairs of my residential house out of the loan borrowed from a scheduled bank. Will I get deduction of R1.5 lakh while computing the income from house property?
Harish Malik
Deduction of R1.5 lakh in respect of interest paid is available only in a case where the loan has been utilised for the purpose of acquisition or construction of a house property. However, the deduction is not applicable where the loan has been used for repairs of the house. If the loan is borrowed for repairs or renewal of a house property, the maximum deduction on account of interest is R30,000. Thus, you will be eligible for deduction of R30,000 only.
The writer is founder of RSM Astute Consulting Group
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