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Your queries: Income tax – You have to pay tax on interest earned on Section 54EC bonds

In case your final tax liability after taking into account the TDS exceeds Rs 10,000, respec-tive instalments for advance tax will have to be paid from the quarter in which gain arose.

Your queries: Income tax – You have to pay tax on interest earned on Section 54EC bonds
The principal amount will be tax-free after the end of the lock-in-period. However, the interest earned on such bonds is taxable.

By Chirag Nangia

I plan to sell my flat. What is the lock-in for investing in 54EC bonds and will the entire amount become tax-free after the end of the lock-in period?
—Deepak Awasti

The lock-in period for 54EC bonds is five years. The exemption is available proportionate to the capital gains invested up to a maximum of Rs 50 lakh. The principal amount will be tax-free after the end of the lock-in-period. However, the interest earned on such bonds is taxable.

I have recently sold my units of gold exchange traded funds which I bought in 2017. How should I calculate the capital gains and should I pay some advance tax?
—Ankur Sharma
You shall be required to pay 20% tax on the long term capital gains, i.e., on sale consideration reduced by indexed cost of acquisition. In case your final tax liability after taking into account the TDS exceeds Rs 10,000, respec-tive instalments for advance tax will have to be paid from the quarter in which gain arose.

Also Read: Social security: Working abroad? You may get EPF benefits

My father sold a house which he purchased in 1985. He plans to invest the money in my name by buying a flat. Will I be able to save tax on the sale?
—K L Harinarayan

The Income-tax Act, states that the exemption shall be provided to the assessee if the amount of capital gains is invested in a new residential property. There is enough jurisprudence to support the view that the exemption is available in case investment is made in the name of spouse and/ or children and occupied for residential purposes.

I often trade in Futures and Options. Do I have to reconcile all the trades myself for calcul-ating tax from this year as the AIR for FY22 is not showing these transactions?
—Suresh Kumar

Yes, you should reconcile the trades with the help of statements delivered by your broker. Further, the trades for FY 22-23 may reflect in the AIS after necessary statutory filings are made by your broker.

I was in the US from May 2007 to May 2019. I bought a house (for my residence) in May 2010 and sold it in May 2022. I have made LTCG on the sale. Tax has been deducted at source from sale proceeds (and paid to IRS) and it will be adjusted when I file my 2022 calendar year tax return there as non resident. For AY 2023-24 (relevant to my FY 2022-23) I am a resident in India. How is LTCG on sale of a house be calculated in India? How and to what extent I will be able to take credit for taxes paid in the USA against taxes payable in India?
—S I Vaghela

Long term capital gains, i.e., sale consideration reduced by indexed cost of acquisition shall be taxable in India at 20%. Considering that you are a resident in India and income is below the taxable limit, the unconsumed threshold will be subtracted from the amount of capital gains. The benefit under the DTAA between India and the US may be available in accordance with law.

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

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