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  1. Income Tax: Indexation benefit on capital gains if property held for more than 2 years

Income Tax: Indexation benefit on capital gains if property held for more than 2 years

If the plot of land you own has been held by you for a period more than 24 months, then you shall be entitled to the indexation benefit on its sale.

By: | Updated: February 27, 2018 3:21 AM
income tax, indexation benefit, capital gains Indexation benefit on capital gains if property held for more than 2 years

Indexation benefit on capital gains if property held for more than 2 years

* I inherited a plot of land and the registry value at that time was Rs 3.28 lakh. Now, I want to sell it and the value is around Rs 55 lakh. Can I pay capital gain tax with indexation benefit?
Gaurav Taneja

If the plot of land you own has been held by you for a period more than 24 months, then you shall be entitled to the indexation benefit on its sale. Long-term capital gains (LTCG) shall be computed by subtracting from the sale consideration, indexed cost of acquisition (which shall be the cost to previous owner in case of inheritance), indexed cost of improvement and expenditure incurred wholly and exclusively in connection with transfer (like brokerage, commission, advertise-ment expenses, etc.). The capital gains so computed are then charged to tax at applicable rates (presently 20%).

* Is it mandatory to submit landlord’s PAN to claim HRA of more than Rs 8,333 per month?
—Manoj Sharma

Employees need to submit Form 12BB to their employer, mentioning the property owner’s name, address and the PAN. If you are paying rent of more than Rs 1 lakh per annum, it is mandatory to report PAN of the landlord to claim HRA allowance. If the landlord does not have a PAN, a declaration to this effect from the landlord with name and address of the landlord can be submitted. This declaration can only be furnished to the employer if your landlord does not have a PAN and not in any other case.

* Is it correct to assume that LTCG on redemption of equity mutual funds/ equity shares made between February 1, 2018 to March 31, 2018 will enjoy full tax exemption as Budget 2018 proposal for imposition of tax on LTCG will be applicable only from April 1, 2018.
– Alok Dabas

Budget 2018 provided that LTCG arising on sale of shares, equity-oriented mutual funds, unit of business trust, exceeding Rs 1 lakh, shall be liable to tax at the rate of 10%, provided security transaction tax (STT) has been paid at the time of purchase as well of sale of such stocks. The LTCG tax will be applicable on sale transactions concluded after April 1, 2018, but the notional gains till January 2018 shall be grandfathered. Any sale of equity concluded between February 1, 2018 till March 31, 2018 will continue to be exempt from LTCG tax.

The writer is partner, Nangia & Co LLP. Send your queries to fepersonalfinance@expressindia.com

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