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Ramalingam Kalirajan |7290 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 11, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Apr 23, 2024Hindi

My land area 750cents. Offer amount rs.33000/cent Fare value rs.54500/cent. Will take 2 capital gain bond Approximate tax calculation pl.? For purchaser what will be the tax? Purchaser will pay the tax beyond 33000/ cent.

Ans: Capital Gains Tax Calculation for Land Sale in Chennai (Disclaimer: This is an estimate, consult a tax advisor for specific calculations)
Here's an approximate calculation of your capital gains tax for selling 750 cents of land in Chennai:

1. Capital Gains Calculation:

Total Sale Value: 750 cents * ?33,000/cent = ?24,75,000
Fair Value (Assuming Used for Cost Calculation): 750 cents * ?54,500/cent = ?40,87,500
Capital Gains: ?40,87,500 (Fair Value) - ?24,75,000 (Sale Value) = ?16,12,500
2. Taxable Capital Gains:

You can potentially claim exemptions under various sections of the Income Tax Act, 1961. Here are two possibilities:

Section 54: This allows exemption of capital gains tax if you invest the gains in a new residential property within one year before or three years after the sale. However, this exemption might not apply since the land you're selling is not considered a residential property.
Section 54EC: This allows exemption if you invest the capital gains in specific government bonds within 6 months of the sale.
In this scenario, without considering any exemptions, your taxable capital gains would be ?16,12,500.

3. Capital Gains Tax Rate:

The capital gains tax rate for land depends on the holding period:
Short-term capital gains (held for less than 2 years): Taxed at your income tax slab rate (can be up to 30%).
Long-term capital gains (held for more than 2 years): Taxed at 20% with indexation benefit (adjusts for inflation).
Without knowing the holding period, we can't determine the exact tax rate.

4. Capital Gains Tax with Bonds (Section 54EC):

If you choose to invest in specific government bonds under Section 54EC within 6 months of the sale, the entire capital gains amount (?16,12,500) can be exempt from taxation.
5. Purchaser's Perspective:

The purchaser generally doesn't pay capital gains tax on the purchase.
However, they might need to pay stamp duty and registration charges on the purchase price of the land as per the prevailing rates in Chennai.
Important Note:

This is a simplified explanation, and tax laws can be complex. For an accurate calculation of your capital gains tax liability, consult a qualified tax advisor in Chennai. They can consider factors like your specific situation, holding period, and any applicable exemptions to provide the most accurate estimate.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.