Your Queries (Income Tax): How is capital gains tax calculated with reference to selling of land?

Updated: April 21, 2021 9:21 AM

For tax purposes, immovable property, i.e., land or building is classified as long-term capital asset if it is held for a period exceeding 24 months, else, it is regarded as short term capital asset.

CBDT issues refunds of over Rs 24,792 crore to more than 15 lakh taxpayers between 1st April 2021 to 17th May 2021," the Income-tax department tweeted.CBDT issues refunds of over Rs 24,792 crore to more than 15 lakh taxpayers between 1st April 2021 to 17th May 2021," the Income-tax department tweeted.

By Chirag Nangia

Last financial year, I made long term capital gains (LTCG) of Rs 2 lakh from mutual funds and booked long term capital loss (LTCL) of Rs 2 lakh from direct shares. While filing return where do I need to show the gains and losses so that losses from shares can be set off against gains from MF.
—Sumitabha Banerjee
Any LTCG arising on transfer of debt mutual fund shall be taxed u/s 112 at 20% whereas LTCG on transfer of units of equity-oriented mutual fund shall be taxed at the rate of 10% (without indexation), if such gains are in excess of Rs 1 lakh in a financial year and Securities Transaction Tax (STT) has been duly paid.

For A.Y. 21-22, you have to file ITR-2/3 wherein under schedule CG, you have to furnish details pertaining to sale transactions of your securities. Details pertaining to sale transaction of equity share or unit of equity oriented fund on which STT is paid will have to be furnished under Schedule 112A for calculation of resultant gain/loss. The gain/loss so calculated shall be auto-populated in Schedule CG.

How is capital gains tax calculated with reference to selling of land?
—Venkataraman T N
For tax purposes, immovable property, i.e., land or building is classified as long-term capital asset if it is held for a period exceeding 24 months, else, it is regarded as short term capital asset. In order to compute capital gains on transfer of land, cost of acquisition, cost of improvement and expenses (incurred wholly and exclusively in connection with the transfer) are to be deducted from the sale consideration. Cost of acquisition and improvement is allowed to be indexed in case of long-term capital assets.

For this purpose, central government has notified cost inflation index. The Income Tax provisions prescribe taxation of long term capital gains at 20% (including surcharge and cess as applicable).

I have got compensation amount of Rs 45 lakh from my employer. Income tax of Rs 12 lakh has been deducted. Please let me know the legal ways to claim the income tax refund
—Manjunath
You must file the relevant ITR and declare this income. Any excess of TDS over the final tax liability shall be refunded by the income tax department after processing of the return.

The writer is director, Nangia Andersen India. Send your queries to fepersonalfinance@expressindia.com

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Partition of HUF under Hindu Law and Income Tax Act
2IT deptt extends deadline for various tax compliances
3Income tax benefits, rebates that senior citizens enjoy