SALE OF FLAT, HOUSING LOAN & THE CAPITAL GAIN

SALE OF FLAT, HOUSING LOAN & THE CAPITAL GAIN




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HOUSING LOAN & THE CAPITAL GAIN

Query 1]

I have sold my old flat for Rs. 12 Lacs purchased by me about 5 years ago for Rs. 6 Lacs. I have housing loan outstanding of Rs. 5 Lacs (Paid from Rs. 12 Lacs)
My queries are:

  1. On what amount I have to pay tax and at what rate?

  2. Is it connected with Housing Loan availed in any way?

  3. I want to purchase another flat of Rs. 24 Lacs. What benefit I will get to save tax?
  4. Is there any time limit for re-investment?
  5. In the IT return can I show Housing Loan repaid principal of 5 Lac? (For getting Maximum benefit of Rs. 1 Lacs)?
  6. When There are two housing loan in one year, partially (8 Months) old flat and partially (4 Months) new flat, can I add both interests (and/or principal) repayment for getting IT benefit? [mahesh25771@hotmail.com]

Opinion:

  1. Income on sale of flat after a holding period of more than 3 years would be treated as Long term Capital gain & is taxable @20%.
    Long term capital gain, as mentioned above, is the amount arrived at after deducting the following from the sale consideration (i.e., Rs. 12 Lacs or the value adopted by the Registrar for levy of stamp duty, whichever is higher): –
    a] Indexed cost of Acquisition and
    b] Expenses incurred for effecting transfer.
  2. Long term capital gain taxability remained unaffected by the availment (or non availment) of the Housing loan. However, it may be noted that if the house property for which deduction u/s. 80C in respect of principal repayment of housing loan is taken by the assessee, then it should not be transferred within a tenure of 5 years from the end of the financial year in which the possession of house property is obtained. If assessee transfers the property within a duration of 5 years then the benefit allowed earlier u/s. 80C shall be denied retrospectively and assessee would be liable to pay the tax so saved as a result of deduction u/s.80C on the principal repayment of housing loan.
  3. & 4. Long term capital gain arising from sale of flat may be claimed as exempt under Section 54 subject to the following conditions:-
    a] The amount of capital gain is invested in another residential house property.
    b] Exemption in respect of the entire amount of capital gain is allowed in cases where the investment in new house or flat is equal to or exceeds the amount of capital gain. Otherwise, gains in excess of the amount invested are brought to tax.
    In your case, if you purchases a flat for Rs. 24 Lacs within a prescribed time limit, you would not be liable to pay any Long term capital gain tax.
    c] Time Limit for Investment: This investment must take place within one year before or within two years after the date of transfer in case of purchase of new residential house and three years after the date in case of its construction.
    d] If you want to save the tax by investing the capital gain amount in the above mode but the amount is not utilized for purchase/construction of the residential house property as mentioned above before the due date of submission of income tax return, then it should be deposited in the “Capital gain Deposit Account scheme” with a nationalized bank. The amount deposited in the said account can be withdrawn for purchase/construction of house property.
  4. There is nothing in the Income Tax Act -1961 which debars your claim of Rs. 1 Lacs u/s 80C as mentioned in the query.
  5. After selling the first house property, you intend to avail the second housing loan. In this case, subject to (2) mentioned above, you can club interest & principal amount of both the loan & will be eligible for IT Relief.

 

Query 2]
Sir, In cases where a Truck Owner doesn’t furnishes his PAN but payment to him for a single sum remains below Rs. 30,000/- & total sum during the year remains less than Rs. 75,000/-, whether TDS is required? [itr_ngp@rediffmail.com]

Opinion:

No Tax Deduction at Source (T.D.S) would be required if the individual payment doesn’t exceeds Rs. 30,000/- AND the aggregate of the payment during the year also doesn’t exceed Rs. 75,000/-.

HOUSING LOAN & THE CAPITAL GAIN

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