Capital Gain on Redeveloped Property: Your Tax Qs Answered

Do you have income tax-related queries?
Please ask your questions HERE and rediffGURU Mihir Tanna, associate director, S K Patodia and Associates, will answer them.

PADMAKUMAR: Sir, 1) I have a flat which is now under re-development. I plan to sell the flat. So, whether any Capital Gain is to be paid under Income Tax or any other amount is to be paid.
2) I have also booked another flat which has been delayed considerably and now I plan to take refund of the same as the RERA authorities have ruled the case in my favour. Hence, whether any Capital Gain is to be paid under Income Tax or any other amount is to be paid.
3) I plan to purchase a new flat on getting the refund amount but probably before selling the first flat which is under re-development as mentioned in Point (1).
So, whether Capital Gain will have to be paid or otherwise.

In case of re-development, capital gain tax is required to be paid in the year in which certificate of completion is issued for new property but as you are transferring it before receiving completion certificate, you have to pay tax in the year of transfer.

Also, when you are transferring under construction property, you are transferring rights which is also capital asset, accordingly you have to pay capital gain on that as well.

Exemption from both of the above said capital gain will depends on certain conditions of Sec 54 and 54F.

Sandeep: If i have a flat jointly in my name and my wife name. there is no loan on the property. Can my wife file the rent from property in her income tax as she is taking the whole rent and rent agreement is also in her name?

In case of joint ownership, person who makes contribution in the purchase consideration will be considered as owner of property for income tax.

Thus, if you have made contribution at the time of purchase of property and/or in loan repayment; rent income will also be taxable in your hand in the proportion of contribution.

Anonymous: 1. In the New Tax Regime, I can save Tax via NPS or Not. I am in a Private Job. 2. Long Term Capital Gain and Short Term Capital Gain both combine 1.25 Lakhs or separations we have to consider with respect to the Share Market and Mutual Fund.

Under new tax regime, person can claim deduction of NPS for contribution by employer.

Further, exemption limit of 1.25 lakh is applicable to long term capital gain covered u/s 112A which covers equity shares on which STT is paid at the time of acquisition as well as transfer (subject to specified condition) and equity based mutual fund scheme.

Shyamal: Regarding LRS I have two queries: 1. TCS deduction over Rs. 7 Lakh - this amount also includes a personal tour ticket amount or only a commercial package tour cost (including ticket amount)?
2. If TCS can be reclaimed while filing IT returns, what is the objective of doing TCS only to refund it a year later? OR are there situations in which TCS is not refunded?

TCS is required to be collected on any amount received from buyer of tour package and it includes expenses for travel, hotel stay, boarding, lodging or any other expenses of similar nature.

In my view, purpose of TCS is keep the records of spending on foreign tour and compare it with capacity of buyer from Income offered to tax.

Chetan: Dear Sir, My annual income this year will be around 600,000 (getting income from FD interest and Short Term and Long term gains by redeeming my Mutual Funds and selling shares). So whether I have to pay any tax next year as per New Tax regime? Thanks

In case your income includes long term capital gains from the sale of listed equity shares or equity oriented mutual funds, then such tax on such capital gain is not eligible for section 87A rebate. Moreover, section 87A tax rebate is not available to non-residents.

• You can ask rediffGURU Mihir Tanna your questions HERE.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.