Capital gain tax

Hi,

You will have to pay capital gain tax. However, the quantification would depend upon the sale value.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Capital gain calculation at he time of getting possession of redeveloped house will be as under:

1. for the purpose of computing the capital gains on transfer of such property for redevelopment, the sale consideration shall be the stamp duty valuation of the new property on the date of issue of such completion certificate. In case any cash compensation is also received in addition to the new house, the same shall be added to the stamp duty valuation of the new house and the aggregate shall be taken into account for computation of capital gains.

2. You an claim the exemption u/s 54 provided you don't sale the new house within specified period of 3 years

You will be liable to capital gains tax based on the value at which you sell your house. You will be eligible for indexation benefit. If you are able to reinvest the capital gains within 2 years in a residential house property or within 3 years in a under construction property, you will not have to pay any taxes.

Hope that clarifies.

Regards,

Nikhil.

Dear Sir,

If the period of holding immovable property is 2 years or more than that then it is known as Long term capital asset otherwise short term

In your case, LTCG tax will be levied when you will get redeveloped building from the builder (which is popularly known as JDA) and STCG tax on the new flat if it will be sold out within 2 years from the date of the agreement/possession.

In case of STCG there is no tax exemption availed.

I would suggest you to hold the flat for atleast three years.

LTCG would be 1.94 Cr (without redevelopment cost) and tax would be 40 lacs (approx). You need to reinvest atleast 1.94 Cr in new flat.

Please share the cost of redevelopment of flat.

Call me at 7060029944

You can claim benefit of the exemption from the capital gains under section 54.

Following conditions should be satisfied to claim the benefit of section 54.

? The benefit of section 54 is available only to an individual or HUF.

? The asset transferred should be a long-term capital asset, being a residential house

property.

? Within a period of one year before or two years after the date of transfer of old

house, the taxpayer should acquire another residential house or should construct a

residential house within a period of three years from the date of transfer of the old

house. In case of compulsory acquisition the period of acquisition or construction

will be determined from the date of receipt of compensation (whether original or

additional).

The exact calculation of tax and exemption can be worked only if you give the details, cost of improvements and its year, brokerage.

1) Who is incurring the cost on redevelopment?. Is it through some builder or you are incurring it?. On the basis of land cost only LTCG is 1.94Cr and you need to reinvest at least LTCG of 1.94 Cr in new flat for exemption.

Yes, you will have to pay short term capital gain tax.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

In this case, you will need to pay tax on STCG.

Hello,

Welcome to the world of taxation in India !!! I assume this is the first time you are dealing with a legal/ taxation issue, hence you are using the words clear cut answer. I would like to inform you first that there is no clear cut answer in law and hence we have so many litigations going on in the court of law.

Now coming back to your case, there can be 2 opinions : 1 it is STCG - since the property you are selling is dated Dec'18 and you will dispose it in 2-3 months.

Opinion 2 : Which is my opinion, is it is LTCG because the property you are selling is derived from the original property dated 1987, hence the Date of Acquisition shall also be 1987. Considering it to be LTCG, the amount of capital gain that you make out of the transaction has to be reinvested within 2 years in a new property. AS per the info provided by you, you are investing the entire sale proceeds in March'19. So that also means that the entire Capital Gain is also invested.

But because of difference of opinion, this is subject to litigation and you may have to fight it out.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP