Author: yogita jathar

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Today will understand new idea to save our Capital Gain from tax…

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📝Any gain arises on sale of land and building can be fully exempt if you are investing resulting amount in any other new asset viz.

• Bonds of NHAI or REC or
• Bonds of Power Finance Corporation or
• Bonds of Indian Railway Finance corporation or
• Any notified bonds by Central Government

🔔this all investment shall not be more than amount of Rs. 50 lacs.

Total Amount of Exemption available under section :

Actual investment or capital gain whichever is lower

Condition for avail benefit of exemption :

1. Investment should be made within 6 months.
2. Capital gain should be by nature long term
3. all investment should not be redeemable before 5 years.
4. Any assessee can claim this exemption irrespective of residential status

This section is available for those who is buying residential house property and again sales it.

lets understand how we can save our capital gain of house property from tax

According to Income Tax Act if you are going to sell your house property and any gain arises this gain will get exempt under section 54 if you are investing in another house property using this capital gain amount.

Conditions for availing exemption under section 54 are

a) This capital gain amount must be utilize for investment in House Property.

b) Investment should be made within 1year or 2 years after construction

c) If you are constructing house property such construction should be made within 3 years

d) Gain amount arose from house property sell shall be deposited in Capital Gain deposit Account Scheme within 6 months from capital gain

e) If Capital Gain amount is upto Rs.2 crore you can invest in more than one house property also. only condition is that gain amount should not be more than Rs.2 crore ( this benefit is available only once in a lifetime )

Available Exemption amount is lower of :

1. Capital Gain Amount or
2. Investment amount

whichever is lower

Lock in period for holding new house property : 3 Years

"On sale of house property within 3 years while computing  capital gain upto the amount of exemption will be reduce from cost of acquisition."

Term short term and long term capital gain is classified on the basis of period of holding assets

1 . Financial assets

• Equity shares
• Equity oriented mutual fund
• Listed shares

Holding period is for less than 12 months then on sale of such asset short term capital gain is arises.

If such asset is held for more than 12 months then on sale it will arise Long Term capital gain.

2 ) Unlisted shares and Land and Building

In this case period of holding criteria is decided for 24 months

If held for less than 24 months then short term capital gain will arise

If held for more than 24 months then long term capital gain arises

3 ) other assets

In this case period of holding is for 36 months

If held for less than 36 months the short term capital gain will arise on sale of such asset

Held for more than 36 months then on sale of such assets long term capital gain will arise

Hope so this article will help you to classify nature of your assets that are present in your portfolio

Keep reading and stay updated!!

1. Transfer of listed equity shares

On transfer of

Listed Equity Shares

Equity Oriented Mutual Funds

Units Of Business Trust

if short term gain arises such income will be taxed at the concessional rate of 15%

If you are holding assets other than above list

It will be taxed at normal slab rates

Advisory Comments :

It will be beneficial if you are investing in listed securities .

Lets understand with small example

Your short term capital gain is ₹1500000

If you are investing in other than listed securities tax on such income will be –

If your age is below 60 years

(15,00,000-10,00,000)×30% =₹1,50,000

On balance ₹10,00,000 = ₹ 1,12,500

Total Tax Payable = ₹ 2,62,500

If your age is above 60 years and below 80 years

Total tax Payable on Income = ₹2,60,000

If your age is above 80 years

Total Tax payable on income = ₹2,50,000

( Above all taxes are calculated excluding health and education cess)

On Other hand instead of above investment if you are investing in any of listed security tax on transfer of such asset –

15,00,000 × 15% = ₹ 2,25,000

From above example its proved 15% tax option is more beneficial

Hope so you all are understood my today’s article..

Thank You !!

“No one can make you feel inferior without your consent “

-Eleanor

On sale of capital assets capital gain arises. Such Gain is classified in two categories namely

• Long Term Capital Gain

• Short Term Capital Gain

Lets understand rates of taxes under Capital gain

💡 Tax rates on Long Term Capital Gain

• If you are investing in unlisted shares or securities of company – @ 20% with benefit of indexation. (however if assessee is a NR – then tax liability in his hands @ 10% without availing benefit of indexation )
• If you are investing in listed shares or bonds – @10% without indexation or 20% with indexation at the option of assessee.
• If you are investing in

1. Listed Equity Shares
2. Equity oriented mutual fund or
3. Unites of Business Trust
4. And STT has been paid on such transaction at the time of sale and purchase

– Tax @ 10% on amount exceeding 100000

(No benefit of indexation and currency fluctuation is available)

According to my point of view investment in 3rd option is more beneficial though no other deductions are available for this option still it attracts lower rate of tax @10% under income tax further additional exemption of 100000 is also available.

*Here point to note down is no rebate is available against income

*deductions under section 80C to 80U only the deductions are not allowed that is other deductions are allowed

In my view, Capital Gain has more debatable issues than any other source of income under the Income Tax. Today in this article I have tried to explain one of its issue that is meaning of rural agricultural land

Indian government has developed the definition by providing areal distance limits

normally we thought that rural agricultural land means land in rural areas but here government defines the rural agricultural land according to population in that area

Any land which is not

(a) in any area which is comprised within the jurisdiction of a municipality(whether known as a municipality, municipal corporation) or a cantonment board and which has a population of not less than 10,000 or

(b) in any area within the distance, measured aerially,—

(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10,000 but not exceeding 1,00,000 ; or

(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 1,00,000 but not exceeding ten lakh; or

(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.

Explanation.—For the purposes of this sub-clause, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;

🚨 Any land in area having population below 10000 it always treated as rural agricultural land

Under Income Tax Act Taxability under head Capital Gain does not arises on sale of rural agricultural land since Rural Area in India is not considered a capital assets

1) Stock In Trade :

If you are in business , you know what stock in trade is. Here government has excluded it from your capital asset in short on sell of it It will arise business income and such income will taxable under normal slab rate without attracting special tax rates under capital gain.

However if you are converting it into capital asset at any time and if any gain arise will get taxable under the head profit and gain from business or profession

💡 Here any foreign institutional investor held securities as stock in trade will be treated as capital assets in his hands

Personal Effects :

If word personal arises our Indian people becomes happier because what they have in their hands they treat it as their personal asset especially gold jewellery

You would get wondered after knowing that jewellery you are purchasing is excluded from the definition of personal assets

Personal assets means Movable Property but it Excludes

-> jewellery

-> Archaeological Collections

-> Drawings

-> Paintings

-> Sculptures

-> Any work of art

-> Any immovable property

On sale of all above capital assets you are liable for capital gain.

🚨 Remember all above given examples are not a personal assets hence capital gain is arises

We Will understand meaning of rural agricultural land in India in next post

“Till keep reading and make sharpen your knowledge!! “

Be Ready for Playing with tax

Do you know what is capital gain.. And if you are investing anywhere do you know that how it will make you liable to pay tax!! Lets 👀

Capital asset means property of any kind connected to business or not connected to businessl whether tangible or intangible, Movable or immovable and

🚨 (“Do you know what is the difference between tangible and intangible and also the examples of it “)

And includes

A ) any right of management or control whatsoever in Indian Company . refer Vodafone Case study given below as example for given point

(Www.Vodafone case.wiki.in)

B ) Securities held by foreign institutional investor

List of capital asset excludes :

a) stock in trade

b) personal effects

C) Rural agricultural land in India

d) Specified bonds

💡 From these you should know the meaning of personnel effect and rural agricultural land because our government made its definition very smartly ..

Will see this in next post in descriptive way.. Have a nice life journey with tax…

💐 Be a not only educated but also a intelligent educator.. 💐

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton