I have one house on my name received by succession. I have two plots purchased in 2008 on my name (own purchase). I have to sale one plot for Rs. 7.50 lakh and make down payment for purchasing new plot of Rs.20.00 Lakh. I am salaried person and paying income tax on salary income and interest on savings. The new plot of Rs.20.00 Lakh I have to purchase is by paying down payment of Rs.8.00 Lakh and bank loan of Rs.12.00 Lakh to land developers. My questions are : 1) Do I have to pay any tax on Rs. 7.50 lakh , receiving from selling of plot ? 2. What is the sell date, mutual agreement date or sale deed registry date? 3. The payment which I will get from selling of plot, I will deposit it in my saving account and I will issue the cheque for down payment for purchasing new plot. Is it correct or do I need to open any other account ?
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1. Since the money from selling the plot is getting invested in another proeprty the deal does not attract capital gain tax.
2. When the sale deed is registered it is called sale dded date while when sale agreement s made it is called sale agreement date.
3.You need not open any new account.
you dont have to pay any tax on sale capital gains received by you if you reinvest the sale proceeds in purchase of another plot
2)as per the current income-tax rules, long-term capital gains on sale of a property held for three years, attracts 20 per cent tax.
3) In case the property you are selling has been inherited or gifted to you, the capital gain (and indexation) will be computed based on the acquisition cost of the original owner.
4) f you want to completely avoid paying tax, you will have to reinvest the capital gain amount.
5)If you do not want to hasten into an investment, you can invest the capital gains in a special Capital Gains Account Scheme (CGAS), with your bank, which serves to inform the taxman that you do plan to invest in a property, but at a later date
6) you need not open separate account if you are buying another plot of land from thje sale proceeds
Is it necessary to construct house on plot I am going to purchase to save capital gain tax ? Is it necessary to register the mutual sale agreement to prove the property sold ?
The Income Tax Act has laid out exemptions under Section 54 and Section 54F to help taxpayers save tax on capital gains.
(1)Exemption under Section 54 is available on long-term Capital Gain on sale of a House Property.
(2)Exemption under Section 54F is available on long-term Capital Gain on sale of any asset other than a House Property.
To reiterate, both the exemptions are available only on long-term capital gains.
Common requirements between the two Sections:
A new residential house property must be purchased or constructed to claim the exemption
The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.
Or the new residential house property must be constructed within 3 years of sale of the property/asset
If you are not able to invest the specified amount in the manner stated above before the date of tax filing or 1 year from the date of sale, whichever is earlier, deposit the specified amount in a public sector bank (or other banks as per the Capital Gains Account Scheme, 1988).
Only ONE house property can be purchased or constructed.
Is it necessary to construct house on plot I am going to purchase to save capital gain tax ?
If the builder of the new residential construction fails to hand over the property to the taxpayer within 3 years of purchase, the exemption is still allowed.
Is it necessary to register the mutual sale agreement to prove the property sold ?
Any transaction with regard to immovable property shall be valid only when it is by a registered document/deed.
sale deed has to be regsitered to prove sale of property