Is it possible to reduce the tax burden on homes? What are the ways of calculating the capital gain tax?
Answered on November 08, 2017
Tax burden can be reduced on capital gains arising on sale of residential property by claiming exemption under section 54 or 54EC or 54EE of the Income Tax Act by fulfilling the condition prescribed in the sections.
Exemption u/s. 54 of the Income Tax Act can be claimed by investing the capital gains in purchase of new residential flat.
Exemption of capital gains to the extent of Rs. 50,00,000 can be claimed u/s. 54EC of the Income Tax Act by investing Rs. 50,00,000/- in bonds notified by Central Government i.e. currently NHAI and RECL bonds.
Exemption of capital gains to the extent of Rs. 50,00,000 can be claimed u/s. 54EE of the Act by investing Rs. 50,00,000/- in units of specified start-up funds as notified by Central Government.
Based on period of holding of the capital assets, capital gains can be calculated as long term or short term capital gains and are taxed accordingly. If the property is held by you for a period more than 24 months than the same will be long term else short term. Indexation benefits will be available in case of long term capital asset.
Exemption u/s. 54 of the Income Tax Act can be claimed by investing the capital gains in purchase of new residential flat.
Exemption of capital gains to the extent of Rs. 50,00,000 can be claimed u/s. 54EC of the Income Tax Act by investing Rs. 50,00,000/- in bonds notified by Central Government i.e. currently NHAI and RECL bonds.
Exemption of capital gains to the extent of Rs. 50,00,000 can be claimed u/s. 54EE of the Act by investing Rs. 50,00,000/- in units of specified start-up funds as notified by Central Government.
Based on period of holding of the capital assets, capital gains can be calculated as long term or short term capital gains and are taxed accordingly. If the property is held by you for a period more than 24 months than the same will be long term else short term. Indexation benefits will be available in case of long term capital asset.
