Where do I put the LTCG amount to save income tax?
About three weeks
is now left to file an income tax return. In this case many people who earn
profits from property broking want to know the tax rules associated with it.
They are also struggling to calculate the benefits of indexation at the
purchase price of the property. We can understand the tax on how much people
earn from the purchase and sale of the property, by a question-answer.
The question is - I
am a retired tax payer of 64 years. I bought a flat with wife, joint name,
which I now want to sell.
How long will the
calculation of long-term capital gains on flat purchased 24 years ago? Also
tell about the option of tax saving. Marketing head of PPFAS Mutual Fund and
certified financial planner Jayant R. Pai answered this.
Pai said,
"Even if you bought flat 24 years ago, long term capital gains (LTCG) will
be considered as base year 2001-02." Pai said that if you sell flat in the
current financial year, then the price of your purchase will be 2.8 times its
price.
You will have to
pay tax in the next financial year. For instance, if you bought the flat for Rs
10 lakh, then now it will be priced at Rs 28 lakh according to the inflation
rate.
You will have to
pay tax at 20.8% on this profit. If the flat is in joint name then both of you
will have to pay tax on the profits from its sale according to their
shareholding. If you want to save tax on profitability on the sale of property,
then you can put up to Rs 50 lakh in the capital gain bond of National Highway
Authority of India (NHAI) or Rural Electrification Corporation (REC).
If you want, you
can invest this money in the purchase of residential property within two years
with this amount of profit. If you are building a new house and want to save
tax on this amount of profits, you can invest this amount in it even after
completing construction within three years.
What is Long Term Capital Gains (LTCG) tax?
If you invest
in a property or other option to make profits and sell it after three years or
more then the profit from this is called Long Term Capital Gains. In simple
terms, this is the profit from sustaining the investment for a longer period.
The tax which the
government charges on this profit is called LTCG tax. In LTCG you get the
benefit of indexing. At different options of investment, however, the time
limit for calculating LTCG is different. In case of investing in shares, LTCG
is applicable after one year, then it is three years for the property.
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