Income Tax queries: You will lose LTCG tax benefit if new property is sold within 3 years of purchase

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January 16, 2018 2:18 AM

You will lose LTCG tax benefit if new property is sold within three years of purchase

As per CBDT circular No. 8/2013 dated October 10, 2013, in order to claim HRA, it is mandatory to quote PAN number of the landlord, if the annual rent exceeds Rs 1 lakh per annum.

• I had purchased a flat in November 2016 after selling a flat (purchased in February 2012) and availed the long-term capital gain (LTCG) exemption. Now, I want to sale the present flat and buy another one. How long do I have to wait to avail LTCG exemption?

– Gaurav Kumar

Since you have availed the LTCG exemption on sale of old flat, you cannot sell the new property within three years of its purchase. Hence, you may lose the LTCG exemption availed if you sell it before the end of three years.

• I am working for aN MNC and have declared my rent paid as Rs 8,200 per month which is less then Rs 1 lakh a year but still my company insists on attaching PAN of landlord. Do I have to give a copy of my landlord’s PAN?

—Jay Shah

As per CBDT circular No. 8/2013 dated October 10, 2013, in order to claim HRA, it is mandatory to quote PAN number of the landlord, if the annual rent exceeds Rs 1 lakh per annum. Thus, in your case it is not mandatory to quote the PAN number of the landlord to claim HRA. Still, if the company insists on providing PAN and deducts tax, you can claim the benefit of HRA while filing your return of income as requirement of PAN is only for the purpose of deduction of tax. You are not required to mention the PAN of the landlord anywhere in your return of income.

• Should only balance amount of profit be invested or should the whole consideration be put in capital gain tax bonds U/S 54 EC (I sold a residential plot after six years of purchase)?

—Vijay Kumaraswami

An assessee is eligible for availing exemption under Section 54EC if the assessee has, at any time within a period of six months, after the date of such transfer, invested the whole or any part of capital gains in the bonds. Thus, if you invest whole of your capital gain in certain bonds then, the whole amount will be exempt u/s 54EC and if a part is invested then, the remaining portion not invested shall be taxable under the head capital gains. For example, if you have earned a long term capital gain of Rs 50 lakh and you invest Rs 45 lakh in these bonds, then Rs 45 lakh will be exempt and the remaining capital gain of Rs 5 lakh will be taxable. However, the investment made by the assessee on such bonds cannot exceed Rs 50 lakh.

TThe author is partner, Ashok Maheshwary & Associates LLP.
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