Year of computation
Dear sir, I received an advance of 5 laCks on 10th march 2016 as part of an agreement of sale. the actual sale will be done on 20th June 2016 and receive the remaining amount which is higher. how the long-term capital gains will be calculated. the amount received as an advance is falling in 2015-2016. the other amount in 2016-2017.
IS IT ADVISABLE TO RETURN BACK THE ADVANCE TAKEN ON MARCH 10TH 2016 AND GO FOR REGISTRATION AS A FRESH DEAL ON 20TH JUNE 2016 AND CLAIM THE TOTAL AMOUNT RECEIVED IN 2016-2017. WHEN IS LAST DATE I HAVE TO PAY THE LONG TERM CAPITAL GAINS TAX IN THIS CASE. THANKS.
IF I KEEP THE AMOUNT IN THE BANK TILL THE DUE DATE OF PAYMENT OF TAX , THAT IS ALMOST 11 MONTHS, SHALL I BE ASKED TO PAY TAX ON THE INTEREST GAINED AND WILL IT BE CALCULATED AS PART OF LONG TERM GAINS AND ADDED TO MY TAX BILL. THANKS.
Sir the Long Term Capital Gains will be attracted only in the F.Y.2016-2017 . We need to check the date of registration.
For the receipt of Advance there will not be any tax. Only upon registration of the Property Tax liability arises
Dear Sir,
It doesn't matter whether the advance is falling in different year what matters in this is the date of agreement in which the asset is sold that is 20th June in your case.
So in this case the deduction under section 54 will cannot be taken for deduction and thus would become taxable.
Thanks and Regards
Dear Sir,
As per the information provided by you, it appears that you have received only the Token amount in order to block your property. I assume possession of the property was not transferred to the buyer.
In such a case Capital Gain will not arise in the FY 2015-16 but will be considered in the FY 2016-17.
Trust this clarifies your query.
Please feel free to call/ get back in case of any further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Dear Sir,
Yes the interest income earned on the Sale Proceeds will be liable for income tax but not under the Capital Gains. It will be taxed as Other Sources.
Trust this clarifies your query.
Please feel free to call/ get back in case of any further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP