Capital Gains Tax on Property in India ? Your advice Pls.?

Question

I have sold my residential flat in Bangalore and the details are here:

Date of purchase: 30/07/2003

Purchase price: Rs. 15,50,000/-

Cost of Registration: Rs: 1,25,000/- (approx)

Date of Sale: 25/05/2008

Sale Price: 25,00,000/-

How much tax I will have to pay? Till when I can delay tax payment to explore other avenues? I have drawn a major portion of the fund. Pls. advice me as to how to plan my tax in this regard. Thank you!

Answer 1

You can open a Capital Gains Account Scheme in banks where it is available.

Deposit your capital gains in this account. You have to utilize this amount within 2 years for purchasing a house or within 3 years for constructing a house from the date of sale.

If this deposit is utilized for the specified purpose within the specified period then no advance tax is required to be paid on the gains.

The deposit in the CGAS has to be made by the investor before the last date of filing his ITR for the relevant year.

In case you do not wish to invest the gains in property, then the first day of paying advance tax is 30th of September.

Assuming a cost inflation index for 2008-09 as 600.

Capital gains is calculated as follows:

Take full amount of consideration or the sales price.

Deduct cost of acquisition with indexation

Deduct expenses towards transfer.

Balance is Capital Gain.

Tax on Capital Gain is 20% at special rate.

According to me your CG is Rs. 329373 & tax is Rs. 65854

Answer 2

Read about capital gains computation and tax and deductions

http://mytaxes.in/index.php?topic=30.0

Answer 3

in your case your exact amount of tax cannot be calculated because the index for year 2008-2009 has not been issued by the income tax dept.

however your capital gains would be around 4.50 lakhs. this will be your long term capital gain. tax rate is 20%.

you can save the tax by investing the 4.50 lakhs into REC Capital gain bonds within 6 months from the date of sale.

either way you can invest the entire proceeds into a new house within 2 year from the date of sale. but in this case you will have to deposit the entire proceeds into a capital gain account with a bank. and that amount can only  be used for the purpose of the new house. [e-mail]

Answer 4

the first to know which you did not state is the type of tax you operate in your country and the tax rate.thus,we have progressive tax,proportional tax and regressive type of tax system.finally you will need to  discipline yourself financially so as to achieve your objectives.thank you.