Income Tax: LTCG tax on the sale of property based on higher of stamp duty value or fair market value

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New Delhi | Published: March 21, 2018 1:45:54 AM

Where the sale consideration received or accruing on transfer of a capital asset, being land or building or both is less than the stamp duty value, then the stamp duty value (SDV) is deemed to be the sale consideration.

Income Tax, LTCG tax , home loan, loan repaymentPrincipal component of home loan repayment is eligible for deduction under Section 80C

* The current selling price of our land in Pune is Rs 900-1000 per sq.ft, while the government’s rate is Rs 1450 per sq.ft. Do I have to pay LTCG tax on Rs 900 or on the prevailing circle rate of Rs 1,450?

– Ujjwal Seth

Where the sale consideration received or accruing on transfer of a capital asset, being land or building or both is less than the stamp duty value, then the stamp duty value (SDV) is deemed to be the sale consideration. How-ever, where the assessee claims that the SDV exceeds the fair market value of the property, the Assessing Officer may refer the valuation of the capital asset to the valuation officer. Hence for the purpose of computing capital gains liable to tax, you must consider the SDV or fair market value, whichever is higher.

* Can I purchase a flat and get it registered in the name of my wife. What is the tax liability if I let out the flat?

—Mihir Dang
Yes, you can purchase the house in the name of your wife. It shall qualify as a gift to your wife, which shall not be liable to tax in her hands. However, income from transfer of house property without adequate consideration will attract clubbing provisions. Hence, rental income arising from the flat shall be clubbed in your hands as you would be deemed the owner of the property.

* I have taken home loan from a NBFC and I am a salaried person. Can I avail interest certificate from them for claiming 80C?

—Prashant Kumar

Principal component of home loan repayment is eligible for deduction under Section 80C, and interest component can be claimed as deduction while computing income from house property under Section 24. However, the deduction is available on receipt of completion certificate from the builder. If the construction of your flat has been completed, you can claim deduction for your loan repayment (principal + interest).

I joined a private company in 2006 and worked there till 2010 when I turned 58. Then I got extension till 2015. The firm is not giving me gratuity. What should I do?

—Venkatesh Rammurthy

Gratuity is given to the employee once he/she has completed at least five years of continuous service, irrespective of his age. Assuming that your reappointment was under a contract of employment as a regular employee, you should seek explanation from your organisation as to why the same was denied to you.

Suraj Nangia is partner, Nangia & Co LLP.

Send your queries to fepersonalfinance@expressindia.com

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