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Sold US MNC ESOPS/ESPP: Claim Long Term Capital Gain Tax Benefit with 2022 Home Purchase?

Samkit

Samkit Maniar  |180 Answers  |Ask -

Tax Expert - Answered on Jul 24, 2024

CA Samkit Maniar has eight years of experience in income tax, mergers and acquisitions and estate planning.
He has graduated from Mumbai’s N M College of Commerce and Economics and has completed his CA from The Institute of Chartered Accountants of India."... more
Asked by Anonymous - Jul 23, 2024Hindi
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I sold my ESOPS/ESPP shares given by an US MNC recently in June 2023. I bought a residential home in OCT 2022, within an year prior to sale. Can I compensate long term gains from this sale with my house purchased?

Ans: Please ensure that ESOPs are held for more than 12 months. If same is the case then you may be able to utilize the proceeds against the house purchased.

Kindly consult your CA before moving ahead.
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

Mihir Tanna  |1043 Answers  |Ask -

Tax Expert - Answered on Nov 17, 2022

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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.

..Read more

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Ramalingam

Ramalingam Kalirajan  |8204 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 08, 2025

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I am 51 years want to park 10 L recieved from LIC. I have Nippon liquid and Axis Short term funds. Where should I keep this,in these debt fund or some other for max return and least risk . Or some balanced advantage funds?
Ans: Since you're 51 years old and the Rs. 10L is from an LIC maturity, I’ll assess this from a 360-degree perspective with low risk and reasonable return focus.

Let us structure this under simple and clear headings:

Understand the Nature of the Rs. 10L
This is a one-time amount, not a regular income.

So, capital protection is important.

Also, some growth is expected, but not with high risk.

Evaluate Your Existing Funds
Nippon Liquid Fund is very low risk.

Good for short-term parking, like few months.

Returns are around 5.5% to 6% yearly.

You can use it if you need money anytime soon.

Axis Short Term Fund is slightly better return.

Slightly higher risk than liquid fund, but still low.

Returns can be around 6% to 7% yearly.

Suitable if you are okay to stay invested for 2-3 years.

Should You Switch to a Balanced Advantage Fund?
These funds invest in both equity and debt.

They adjust the mix based on market conditions.

They give better return than debt if held for 3-5 years.

But, they carry moderate market risk.

Return range can be 8% to 10% per annum.

Not guaranteed, but historically stable.

Suitable if your risk tolerance is moderate.

Also, you must stay invested for at least 3 years.

What You Can Do Now (Allocation Suggestion)
Here is a simple, low-risk and flexible suggestion:

Rs. 2L in Nippon Liquid Fund: For immediate needs.

Rs. 4L in Axis Short Term Fund: Safe with better return.

Rs. 4L in Balanced Advantage Fund (via MFD with CFP): For better growth.

Choose an actively managed regular plan.

Avoid direct plan. They lack support and monitoring.

Regular plans offer advisor support and rebalancing guidance.

Why Not Direct Plan?
Direct plans look cheaper.

But they don’t guide you during market falls.

Many investors panic and exit early.

This leads to poor returns.

With MFD + CFP support, you stay invested longer.

Long-term behaviour matters more than cost.

Why Not Index Funds?
Index funds blindly follow the market.

No protection during market fall.

No fund manager to adjust strategy.

Active large-cap or balanced funds adapt better.

At your age, protection is more important than chasing index.

Important Tax Point
Debt funds and balanced advantage funds are taxed as per income tax slab.

If you hold for 3+ years, tax is less due to indexation benefit in earlier rules.

But now, for debt funds, tax is same as your slab.

So, choose based on your tax slab also.

But do not let tax alone decide. Safety is first.

Final Insights
Your Rs. 10L should grow slowly and stay safe.

Split into 3 buckets: short-term, mid-term, and medium-risk.

Liquid fund for liquidity.

Short-term debt for capital stability.

Balanced advantage for gentle growth.

This mix gives you flexibility, return and low risk.

Please review once a year with a Certified Financial Planner.

He/she will help you shift the mix if your goal or market changes.

No need to chase high returns. Protect capital, grow steadily.

You already took a right step by asking before investing.

That clarity helps avoid mistakes.

With this structure, your money can stay safe and still grow.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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