Query 1]
I am a Central Government Employee & as per the newly introduced Children Education Scheme getting Rs. 12, 000/- per child on producing receipts of payment against tuition fee, dress, books, shoes etc. My query is whether I can get exemption for the same from salary income besides Rs. 1 Lacs for savings? There is certain ambiguity amongst various organizations. So please guide. []

The amount is taxable. No exemption is available on such sum. However, payment of tuition fees of a child is eligible for deduction u/s 80C subject to overall limit of Rs 1 Lacs.


Query 2]
I am an Assistant Professor in Indira Gandhi Krishi Vishwa – vidyalaya (IGKV), Raipur. My annual salary is around Rs. 2.60 Lacs. In this financial year I got two additional amount as under: –
Source-I: -I sold small property of my own for Rs. 6.11 Lacs, now deposited in the savings passbook.
Source-II: – I got Rs. 85,000/- as payment of my GPF from my previous service (Resigned from that post to join the present post.)
My query is whether the above source of income/amount is taxable as per Rules & in what way I should file/declare / quote the same in income tax return.
Opinion: –
  1. Income from sale of property is taxable under the head “Income from Capital Gain”. If the property is sold after holding period of 3 years, the income would be termed as “Long term Capital Gain” (LTCG) and the same shall be calculated by taking indexation benefit. The income would be taxed at a special rate of 20%. Subject to certain stipulations, you can save LTCG Tax by investing the amount for purchase of another residential house property or by investing in the bonds issued by National Highway Authorities of India (NHAI) or Rural Electrification Corporation (REC). The same shall be required to be shown as “Income from Capital gain” in “schedule CG” in Income Tax return Form ITR-2.
  2. The amount received out of withdrawals from recognized PF account of previous employment shall be exempt from tax provided it is received after rendering continuous service of 5 years. If so exempt, the same can be declared as exempt income in “Schedule EI” in ITR-2.


Query 3]
I am owner of a shop in Nagpur. It was purchased by me in 1994. The building is owned by a co-operative society and the shop is purchased by transferring the share in my name. At the time of sale, I need to transfer that share in favor of intending buyer by executing Transfer Deed (& not sale deed). The market valuation as per stamp duty valuation as per Registrar’s reckoner is about Rs. 39 Lacs whereas actually I will be selling it for Rs. 23 Lacs.
Whether I will be liable to pay the capital gain tax on the basis of Rs. 39 Lacs or on the basis of Rs. 23 Lacs? One of the shop owner has paid the tax on the basis of actual sale consideration (& not stamp duty valuation) in 2004 only.  After sale, If I invest in residential house property, how much do I need to invest i.e., Rs. 39 Lacs, Rs. 23 Lacs or Long term capital gain? What are the conditions for claiming income tax exemption? Please guide & elaborate as there is lot of confusion in the opinions. [JA]
  1. In your case, the long term capital gain tax would be required to be computed by taking the Sale consideration at Rs. 39 Lacs.
  1. Section 50C of the I.T. Act- 1961 provides for calculation of Capital gain on the basis of Stamp duty valuation adopted by the Registrar.  Originally when the provision was introduced, only the word “assessed” was there in section 50C. With effect from 01.10.2009, a new word “or assessable” is also added to section 50C as a result of which you would be required to calculate Long Term capital Gain (LTCG) on the basis of Rs. 39 Lacs.
  2. LTCG arising on sale of shop can be claimed as exempt u/s 54F if the following conditions are satisfied: –
  1. The transferor must be individual or a Hindu Undivided Family.
  2. The capital gain should arise from the transfer of any long-term capital asset other than residential house property. (If capital gain arises from transfer of a residential house property, an exemption can be claimed u/s 54.)
  3. The transferor must, within a period of one year before or two years after the date on which the transfer took place purchase, or within a period of three years after that date construct, a residential house.
  4. The transferor does not own more than one house property, other than the new asset, on the date of transfer of the original asset.
  5. The assessee shall not purchase any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset or construct any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset.
  6. If all above conditions are satisfied, transferor can claim entire LTCG as exempt provided entire amount of sale consideration is invested for new residential house property. If entire sale consideration is not invested then Exempt LTCG shall be Cost of New House * Capital Gain/ Net Sale consideration.
  7. U/s 54F, it’s the investment of actual sale consideration that determines the claim of exemption. Effectively, if you invest the entire sale consideration of Rs. 23 Lacs for purchase of residential house property, you can claim LTCG as exempt.


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