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Query 1]
- Sir, I have two house properties in Gujarat (Kutch & Ahemdabad) purchased by me in the year 1978 & 1982. I wish to sale the same in the current year. The capital gain roughly calculated on the above flat sell is around Rs. 43 Lacs & Rs. 67 Lacs respectively.
- I wish to purchase two flats, one in Raipur & the other one in Nagpur for Rs. 60 Lacs each. I have two sons, one in Raipur & the other one in Nagpur. The flat is intended to be purchased by me with my son name as the co-owner in each of the flat separately. I have following queries for which I seek your guidance:
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Whether the capital gain amount will be exempt as my total investment in the residential house properties will exceeds the total amount of capital gain?
- Whether the exemption is restricted to purchase of one house property or both the house properties? I already have one more house property in my name in Nagpur.
- Whether the inclusion of my each son name in sale deed will pose any difficulty in claiming exemption even though I am paying the amount of new property and will be reflecting so in my records & documents?
- Any other precautionary or tax planning aspects should I consider in the said transactions? [K. Patel– kanishkapatel19@gmail.com]
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Opinion:
- We are happy to see the pre-mortem approach to tax planning which is more beneficial and helpful rather than doing the post-mortem after the transactions.
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The point wise replies to the issues raised are as follows:
- The total capital gain on sale of existing house properties is expect to be around Rs. 110 Lacs whereas the aggregate investment in the new residential house properties is expect to be around Rs. 120 Lacs. Now, your question is whether the exemption will be available for the entire/ aggregate amount of capital gain or not? It may be noted that Long term capital gain is exempt u/s 54 if the LTCG on sale of house property is invested within a prescribed period for purchase of another residential house property.
- We are of the view that the exemption will be available in relation to each set of sale and corresponding investment in the residential house. Particularly in your case, for one property, the entire amount of LTCG will be exempt whereas for the second property, Rs. 7 Lacs will be taxable as LTCG. The concept of investment of LTCG vis a vis aggregate investment in the new house properties appears to be unacceptable by the Revenue.
- Exemption is available against sale of any number of residential houses if there are corresponding investments in residential house subject to fulfillment of all other conditions. So, if there is sale of more than one residential house, the exemption will be available in relation to each set of sale and corresponding investment in the residential house. Exemption is available even if you have one more residential house property (or even more than one also) at the time of reinvestment.
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Exemption cannot be deny if your son name is incorporat in the sale deed for the name sake.
- As far as the tax planning aspect is concerned, our readers may please note that the new Direct Tax Code has originally proposed to replace the base date of from existing 01.04.1981 to 01.04.2000 for computation of capital gain. However, dust on the DTC has not yet been cleared & the final provisions, date of its enactment, etc are still in the doldrums. We will try to cover the tax planning aspects in the new Direct Tax Code. Vis a vis Income Tax Act after the Government notifies the date of its enactment.
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Query 2]
- What penalty can be levied for non filing of quarterly TDS Return? And after how much period such penalty can be levied? Kindly explain under which section it can be penalise, subject to maximum amount of penalty?[pravin.aparajit@gmail.com]
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Opinion:
- Its a very relevant query indeed. There is a large scale non compliance on various fronts as far as the provisions of the TDS are concerned. For the mass benefit & for awareness of our readers, we are summarizing the penal consequences for non compliance of few TDS Provisions:
Nature of Default | Section | Penalties |
Failure to deduct TDS | Sec. 201(1A) | Interest @ 1% per month for every month or part there of from the date of deduction to the date on which it is actually paid [Even if the delay is by one day, you will pay one month’s interest.] |
Failure to deposit after Deduction | Sec. 201(1A) | Interest @ 1 ½ % per month for every month or part there of from the date on which tax was deductible to the date on which it is actually paid |
Failure to Quote TAN in challan or certificate, etc. | 272BB(1A) | Rs. 10,000/- |
Failure to Deposit TDS | 276B | Rigorous imprisonment for a term of which shall not less than 3 months but may extend to 7 years and also fine. |
Failure to issue TDS Certificate | 272A(2)(g ) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to furnish the details of no tax deduction on deposit [Person specified in 194A(3)] | 272A(2)(l) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to submit declaration u/s 197A | 272A(2)(f) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to submit TDS Return | 272A(2)(c) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to submit statement of perquisite | 272A(2)(i) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to submit Quarterly Statement | 272A(2)(k) | Rs. 100/- per day but does not exceed the amount of TDS |
Failure to quote PAN or quoting PAN which is false | 272B(2) | Rs. 10,000/- |