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Mihir Tanna  |706 Answers  |Ask -

Tax Expert - Answered on Oct 31, 2023

Asked by Anonymous - Aug 18, 2023Translate

Sir, I paid 1% TDS on purchasing a flat at the cost of 80 lacs. Can it be adjusted on my long terms capital gain tax (specially sale of share of Long term in nature). Rs.80000 I paid as TDS, my long term gain is 500000, ie I have to pay 10% on 5.0 lacs ie Rs.50000.. so can i adjust with my paid TDS this amount.

Ans: Credit of TDS paid at the time of acquisition of property is available to seller and not to the buyer
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.

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Mihir Tanna  |706 Answers  |Ask -

Tax Expert - Answered on Nov 07, 2022

Good Morning. I am a fan of yours and read you severally on Rediff replying queries of various Tax Problems. Sir, now I have a tax query and earnestly request you to resolve that which is as follows: My query is: I booked an under construction flat worth Rs.45.00 lacs which is scheduled to be ready for procession in year F.Y.2025-26. Now I sold shares worth Rs. 10,00,000/- and total amount paid to builder in F.Y.2022-23. Out of shares sold my LTCG IS Rs.700,000/-. Can I claim exemption for LTCG to that amount only which is given as advance in corresponding year? Again in F.Y. 2023-24 I will pay Rs.20,00,000/- by selling shares and LTCG of Rs.10,00,000/-. Can I claim Exemption for LTCG? Same process will happen in next 2 F.Ys. till procession of my new Flat. Can I claim exemption on LTCG on sale of shares in each financial year? Please also guide to fill ITR also for claiming above exemption in parts.
Ans: In respect of capital gains you can claim exemption from long term capital gains if the net sale consideration is invested in booking an under construction house. You get an extended period of three years to get possession in case it is booked with a developer.

In case the sale consideration is not fully invested in the residential house before filing of the Income Tax Return, the unutilised money has to be deposited with a bank under Capital Gains Account Scheme. The money deposited can be utilised within the prescribed period for payment of house.

You have to keep in mind that to claim this exemption, you should not own more than one residential house property on the date of sale of the shares except the one in respect of which you are claiming the exemption.

So once you claim exemption in FY 22 23, it is not advisable to claim exemption against gain earned in subsequent years.

In Income Tax Return, you can show the amount invested in property as exemption u/s 54F and if the entire 10 lakh consideration can not be invested in property then open CG account and show amount in ITR accordingly.


Mihir Tanna  |706 Answers  |Ask -

Tax Expert - Answered on Nov 17, 2022

I am a senior citizen retired pensioner. I had intention to sell my both properties located in one town and to invest in one property in another town where I wanted to settle in my retired life. I wanted that the sale proceeds of my two properties should be almost same as the purchase value of a single property in another town to settle there. I had bought a property in 2015 at Rs 40 lakh in my single name and sold in Feb 2022 at Rs 52 lakh. The buyer deducted 1% TDS and filled in form 26QB and I got form 16(B) from buyer and details of TDS are seen reflected in my Form-26AS. Thereafter, my 2nd property that I had bought @Rs 7.3 lakh 20 years back, was attempted to dispose, but did not materialise till now.  Anyway, I bought a 5-yr-old jointly owned property from a couple at Rs 80 lakh in June 2022 and deducted 1% TDS (@0.5% from each owner), filled in Form 26QB and provided form 16(B) to the sellers.  So, I invested the sale proceeds of my 1st house 'within a year' of its disposal, in buying a house from Long Term Capital Gain point of view. My IT Return for AY 2022-23 was filed in July 2022 and it got approved. The 1% TDS deducted by buyer on my 1st property sale got refunded/ adjusted.  I am still trying to sell my 2nd property 'within one year' of buying the June, 2022 property. I want to do this to take benefit of Long Term Capital Gain Tax. I want to know whether I am going to get the IT benefit by selling my 2nd property 'within one year' of purchase of my June 2022 property ? I am more eager to know how sale of 1st property in financial year 2021-22 (Feb.'22), purchase of a property in FY 2022-23 (June'22) and again sale (proposed) of 2nd property, (all within 2 years from LTCG point of view) are shown in my next IT Return (AY2023-24).  I am eager to hear from you, Sir!
Ans: As you must be aware, if person wants save tax on capital gain, person should acquire another residential house within a period of three years from the date of transfer of the old house or should construct a residential house, within a period of one year before or two years after the date of transfer of old house.

With effect from Assessment Year 2021-22, the benefit in respect of investment made in two residential house properties is available. The exemption for investment made, by way of purchase or construction, in two residential house properties shall be available if the amount of long-term capital gains does not exceed Rs 2 crore.

If assessee exercisesoption, he shall not be entitled to exercise this option again for the same or any other assessment year.

Benefit will be lower of following:

  • Amount of capital gains arising on transfer of residential house; or
  • Amount invested in purchase/construction of new residential house property

If till the date of filing the return of income, the capital gain arising on transfer of the house is not utilised (in whole or in part) to purchase or construct another house, then the benefit of exemption can be availed by depositing the unutilised amount in Capital Gains Deposit Account Scheme in any branch of public sector bank, in accordance with Capital Gains Deposit Accounts Scheme, 1988.

So in your case, if you satisfy all the prescribed conditions (including acquiring new property within 3 years, depositing unutilised amount in capital gain deposit account and disclosure is made regarding same in ITR of AY 2022-23 & AY 2023-24); you will get IT benefit.


Hardik Parikh  |106 Answers  |Ask -

Tax, Mutual Fund Expert - Answered on Jul 24, 2023

Dear Sir...Can the LTC Loss of Rs.3.5Lacs incurred against Flat Sale ( after 12Yrs) in May2023 can be adjusted against LTC Gains of Rs.4Lacs earned from Redemption of Eq.Shares & Mutual Funds ( after 5Yrs.) In June2023..and the Balane of Rs.50Thousand of LTC Gains be Exempted upto 01Lac. Also any Limit of upto 02Lac LTC Loss only can be adjusted against 4L LTC Gains in this FY 2023-24 and the Balance of 1.5L LTC Loss to be carried ovet in subsequent year which can be adjusted ONLY against LTC Gains earned from Property in that Year. Pl advise & Clarify...Thanks. Sanjiv Kumar.
Ans: Dear Sanjiv,

Based on the information available, it appears that you can indeed adjust your Long Term Capital (LTC) loss against LTC gains in the same financial year.

In your case, the LTC loss of Rs. 3.5 Lacs from the sale of a flat can be adjusted against the LTC gain of Rs. 4 Lacs from the redemption of equity shares and mutual funds. This leaves you with a balance LTC gain of Rs. 50,000.

As per the Income Tax Act, LTC gains up to Rs. 1 Lac are exempt from tax. Therefore, your balance LTC gain of Rs. 50,000 should be exempt.

Regarding the limit of LTC loss adjustment, there doesn't appear to be a specific limit of Rs. 2 Lacs for adjusting LTC loss against LTC gains. However, any unadjusted LTC loss can be carried forward to subsequent years and set off against future LTC gains.

Please note that this is a general interpretation based on the available information. For a more accurate understanding of your tax liability, I would recommend consulting with a tax professional or a chartered accountant who can provide advice based on a comprehensive understanding of your financial situation.

I hope this helps!

Tejas Chokshi  |126 Answers  |Ask -

Tax Expert - Answered on Aug 07, 2023

Sir, during this month (August2023) I sold my flat which was purchased by me in 2010. The total sale consideration as per govt guidelines was Rs 5973000/ and was registered at that amount, accordingly TDS at 1% on it was deducted at Rs 59730 and was credited to the govt account. My query is , TDS on sale of property at 1% is applicable in case the amount of sale exceeds Rs 50.00 lakhs . Whether the TDS is applicable on full sale consideration or on the difference amount ie, (5973000-500000)Rs 973000. 2. I had purchased the flat in April 2010 and the purchase price was Rs 3150000/ including Stamp duty, Registration charges and small amount towards interior work. I request you to advise me the applicability of Capital Gain Tax on it. Now I do not want to invest in any new property or in Capital gain bonds, I want to pay the applicable tax and close the transaction. Please advise me about the applicable Tax and close the formalities applicable in this regard. Siddramappa Kudarimoti.
Ans: The TDS (Tax Deducted at Source) of 1% on the sale of property exceeding Rs 50 lakhs is applicable on the full sale consideration. In your case, since the total sale consideration was Rs 5,973,000, the TDS of Rs 59,730 was deducted as per the guidelines. Based on the information you've provided, you might be liable for Capital Gains Tax. Capital Gains Tax is calculated based on the difference between the selling price and the indexed purchase price. The indexed purchase price adjusts the original purchase price for inflation over the holding period.
The tax on long-term capital gains is usually 20% (plus applicable surcharge and cess) after considering any exemptions or deductions available under Section 54 or Section 54F if you are not investing in another property or capital gains bonds.

To close the transaction and fulfill your tax obligations, you should consider the following steps:

a. Calculate Capital Gains: As explained above, calculate the capital gains based on the indexed purchase price and selling price.

b. Pay Capital Gains Tax: If you decide not to invest in another property or capital gains bonds, you will need to pay the applicable capital gains tax. You can do this by filling out the appropriate sections in your income tax return and paying the tax amount.

c. File Income Tax Return: Ensure that you accurately report the capital gains in your income tax return for the assessment year.

d. Keep Documentation: Maintain all relevant documents related to the property sale, purchase, and tax calculations for future reference
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