By reinvesting capital gains in new flat, you can claim tax deducted on sale of old flat

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May 14, 2019 1:33 AM

If capital gains reinvested in new flat, you can claim tax deducted on sale of old flat.

Q. I sold a flat for Rs 35 lakh. With that, I cleared the home loan outstanding on it and bought a new flat by investing the balance sale proceeds along with fresh bank loans. Can I claim the TDS and do I have to pay capital gains tax? – B Ashok Kumar

Yes, you can claim the TDS which has been deducted on sale of property. If the gain is long term, i.e., you have held the property for more than two years, you are liable for long term capital gains (LTCG) tax but you are eligible to save this tax to the extent of the capital gains or amount invested in the new flat, whichever is less, under Section 54. Under this provision, LTCG is exempt if the person purchases a new house within two years from the date of sale of the old house. So, you can claim the exemption to the extent of the amount of capital gains invested in new house.

Q. My son and daughter-in-law are NRIs. My daughter-in-law while working in India saved her salary by paying tax. Now she wants to gift her savings to her husband who is also an NRI. How can she transfer her money, and in what account, i. e., NRE, NRO or Indian saving account? Does she or her husband have to pay income tax on it and what documents are required for this taxation? — A Singh

Assuming your son and daughter-in law both have NRO accounts in India, your daughter-in-law can transfer the amount from her account to your son’s NRO account. This transfer will not result in any income in his hands as both of them are covered under the definition of relatives. However, using this money, if your son earns any income, then such income would be clubbed in the income of your daughter-in-law and she would be required to pay tax on that resultant income. For example, if your son makes some fixed deposits from this amount or buys a property in his name, the interest on such fixed deposits or rental on the property would be considered income of your daughter-in-law.

Q. Besides salary, I have consultancy income. Which ITR should I file? — Ketan Vyas

If you are spending recurring efforts and time to earn the consultancy income, it would be considered as business income. You will need to report this in ITR Form 3. Else, you can report this as income from other sources in ITR-1 or 2.

(The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to

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