The capital gains so compu-ted are then charged to tax at applicable rates (20%). Any gain on sale of a capital asset other than a residential property shall be exempt under Section 54F, in full, if the entire sale proceeds are invested in purchase of one residential house property.
• I bought a commercial office property in year 2000. Now I want to sell it. Kindly advice: (A) How the long-term capital gains (LTCG) will be calculated and what will be the tax on it? (B) How can I save tax on these LTCG? (C) Can I also save tax if I don’t buy another property?
– Gurdip Singh
For computation of LTCG, indexed cost of acquisition, indexed cost of improve-ment and expenditure incurred wholly and exclusively in connection with transfer (like brokerage, commission, advertisement, expenses, etc.,) are subtracted from the sale consideration. The capital gains so compu-ted are then charged to tax at applicable rates (20%). Any gain on sale of a capital asset other than a residential property shall be exempt under Section 54F, in full, if the entire sale proceeds are invested in purchase of one residential house property.
The new property has to be purchased within one year before or two years after the date of transfer of asset or constructed within a period of three years after the date of transfer. The exemption is allowed only if the assessee does not own more than one residential house property on the date of transfer of asset (excluding the new house).
Alternatively, by investing LTCG in specified assets like bonds of RECL/NHAI, within a period of six months from the date of transfer, the assessee can claim exemption under Section 54EC. However, total investment in the financial year and the subsequent financial year is limited to Rs 50 lakh. Exemption under Section 54EE can also be claimed if the capital gains are invested in the units of Start-up India Action Plan Fund. Here too, the exemption is available up to Rs 50 lakh in the financial year and the subsequent financial year. It is possible to claim both deduction under both Section 54EC and Section 54EE.
• My mother wants to gift her her flat to me and my sister together. Do we have to pay stamp duty in sub registrar office, and if yes, how much?
As per the Transfer of Property Act, an immovable property can be transferred through a gift deed to be registered with the sub-registrar. Stamp duty and registration fee has to be paid to register the gift deed. Stamp duty rates vary in different states and are generally the same as in the case of a regular sale. Concessions may be offered by some state governments in cases like transfer to relatives.
The writer is partner, Nangia & Co LLP. Send your queries to email@example.com