The long-term capital gains from sale of a residential house property (held for more than 24 months) can be claimed as exemption under Section 54 by re-investing in another residential house property within one year before or two years after sale or in constru-ction of another house property within three years of sale.
I booked a flat five years ago and paid the instalments from my savings and capital gains from selling shares. It will be registered this financial year. I bought a flat in Mumbai in 2009 and will sell it this year. For the long term capital gain arising out of selling the flat, can it be adjusted against the payments already made to the builder for the last few years?
—Immadi B Rao
The long-term capital gains from sale of a residential house property (held for more than 24 months) can be claimed as exemption under Section 54 by re-investing in another residential house property within one year before or two years after sale or in constru-ction of another house property within three years of sale. It has been held in various case laws that entering into a purchase agreement for a new house is sufficient compliance and registration is not mandatory. The property was purchased/ booked by you five years ago. That being the case, conservatively, it is advisable that exemption under Section 54 is not claimed since the stipulated time lines for reinvestment are not fulfilled, which may lead to litigation.
Do I have to show capital gains income (LTCG/STCG) in ITR even if I re-invest the capital gains again in stocks and MFs?
—Raj Shekhar Kashyap
A taxpayer must necessarily disclose income earned from all sources, in a financial year, while filing IT Return. Therefore, long term/ short term capital gain on sale of assets must be reported in the ITR, irrespective of whether the sale proceeds are reinvested elsewhere or not.
As an NRI, if the short term capital gain in equity is less than Rs 2.5 lakh, do I need to file ITR? Also, will any TDS be deducted on the profit?
As per the Income Tax Act, a non-resident individual/HUF cannot adjust the basic exemption limit against short term capital gain (STCG) covered under Section 111A. Therefore, you shall be liable to tax on short term capital gain on sale of equity shares at the rate of 15% on the entire gains. TDS shall be accordingly deducted at the rate of 15% on such income. Assuming that your total income comprises only this STCG, which is less than the basic exemption limit, (i.e. Rs 2.5 lakh), you do not need to file a Return of Income in India.
The writer is director, Nangia Andersen India. Send your queries to firstname.lastname@example.org