Circular for Approval of Long Term Bonds and Rate of Interest for the purpose of Sec. 194 LC of IT Act.

CBDT has issued a circular No. 15/2014 dated 17th, Oct., 2014 regarding Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961 which is as under :

CIRCULARNO.-15/2014

F.No.133/50/2014-TPL 

Government of India 

Ministry of Finance 

Department of Revenue 

(Central Board of Direct Taxes) 

--------- 

New Delhi, the 17th October, 2014 

Sub: Approval of long term bonds and rate of interest for the purpose of Section 194LC of the Income-tax Act, 1961-regarding. 

… 

Section 194LC of the Income-tax Act, 1961, introduced by the Finance Act 2012, provided for lower withholding tax at the rate of 5% on the interest payments by Indian companies on borrowings made in foreign currency by such companies from a source outside India. The benefit was available in respect of borrowings made either under an agreement or by way of issue of long term infrastructure bonds. The section further provided that such borrowing and the rate of interest should be approved by the Central Government. Subsequently with a view to lower the compliance burden and reduce the time lag which would have arisen on account of case-by-case approval, the Central Government had decided to grant approval to all borrowings by way of loan agreement and long term infrastructure bonds provided they satisfy certain conditions . The approval and the conditions were detailed in the CBDT Circular No.7 of 2012 dated 21st September, 2012. 

2. The Finance (No. 2) Act, 2014 has amended section 194LC with effect from the 1st Day of October, 2014. Consequent to the amendment, the concessional rate of withholding tax has been extended to borrowing by way of any long term bonds, not limited to a long term infrastructure bond, if the borrowing is made on or after 1st day of October, 2014. Further, the concluding date of the period of borrowings eligible for concession under Section194LC which was earlier 01/07/2015 has been extended to borrowings made before the 1st day of July, 2017. 

3. Therefore, the approval of the Central Government is further required in respect of long term bond issue and the rate of interest to be paid on such borrowings. 

4. Considering the fact that there would be a large number of bond issues to be undertaken by Indian companies, providing a mechanism involving approval in each and every specific case would entail avoidable compliance burden on the borrower/issuer of bond. In order to mitigate the compliance burden and hardship, the Central Board of Direct Taxes [with the approval of t h e Central Government] conveys the approval of the Central Government for the purposes of section194LC in respect of the issue of long term bond including long term infrastructure bond by Indian companies which satisfy the following conditions:- 

a. The bond issue is at any time on or after 1st day of October, 2014 but before the 1st day of July, 2017. 

b. The bond issue by the Indian company should comply with clause (d) of sub section (3) of section 6 of the Foreign Exchange Management Act, 1999 read with Notification No. FEMA3/2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign exchange) Regulations 2000, dated May 3, 2000, as amended from time to time, (hereafter referred to as “ECB regulations”), either under the automatic route or under the approval route. 

c. The bond issue should have a loan Registration Number issued by the Reserve Bank of India (RBI). 

d. The term “longterm” means that the bond to be issued should have original maturity term of three years or more. 

5. Further, the Central Government has also approved the interest rate for the purpose of section194LC in respect of borrowing by way of issue of long term bond including long term infrastructure bond as any rate of interest which is within the All-in-cost ceilings specified by the RBI under ECB regulations as is applicable to the borrowing through a long term bond issue having regard to the tenure thereof. 

6. In view of the above, any bond issue, which satisfies the above conditions, would be treated as approved by the Central Government for the purposes of section194LC. 

7. It is also clarified that consequent to the amendment to Section 194 LC the approval of the Central Government contained in Circular No.07/2012, in so far as they apply to borrowings by way of a loan agreement, shall be valid for the borrowings made on or before 30/06/2017 instead of 30/06/2015 as mentioned in the said Circular. 

(AshishKumar) 

Director(TaxPolicy &Legislation) 

Copyto:-
1. PS to FM/OSD to FM/OSD to MoS(R).
2. PS to Secretary(Revenue).
3. The Chairman, Members and all other officers in CBDT of the rank of Under Secretary and above.
4. All P r . Chief Commissioners/ Pr.Director General of Income-tax–with a request to circulate amongst all officers in their regions/charges.
5. Pr.DGIT(Systems)/ Pr.DGIT (Vigilance)/ Pr.DGIT (Admn.)/ Pr.DG (NADT)/Pr. DGIT(L&R).
6. Media Co-ordinator and Official spokesperson of CBDT.
7. DIT(IT)/DIT(RSP&PR)/DIT(Audit)/DIT(Vig.)/DIT(Systems)/ DIT(O&MS)/DIT(Spl.Inv.).
8. The Comptroller and Auditor General of India (30copies).
9. Joint Secretary and Legal Advisor, Ministry of Law and Justice, New Delhi.
10. The Institute of Chartered Accountants of India, IP Estate, New Delhi.
11. All Chambers of Commerce as per usual mailing list.

(Ashish Kumar) 

Director (TaxPolicy& Legislation) 

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Approval of Long Term Bond and Rate of Interest for concessional TDS under Sec. 194LC w.e.f. 1.10.2014 - CBDT.

CBDT prescribes conditions to get automatic approval for long term bonds for concessional TDS under Sec. 194LC vide circular No. 15/2014 dated 17th Oct., 2014.

Section 194LC of Income Tax Act, 1961, introduced by the Finance Act, 2012, provided for lower withholding tax at the rate of 5% on the interest payments by Indian companies on borrowings made in foreign currency by such companies from a source outside India.  The benefit was available in respect of borrowings made either under an agreement or by way of issue of long terms infrastructure bonds.  The section further provided that such borrowing and the rate of interest should be approved by the Central Government Subsequently with a view to lower the compliance burden and reduce the time lag which would have arisen on account of case-by-case approval, the Central Government has decided to grant approval to all borrowings by way of loan agreement on long term infrastructure bond provided by satisfy certain condition.  The approval and the conditions were detailed in the CBDT circular No. 7 of 2012 dated 21st Sep., 2012.

The Finance (No.2) Act, 2014 has amended section 194LC w.e.f. 01.10.2014.  Consequent to the amendment, the concessional rate of withholding tax has been extended to borrowing by way of any long term bonds, not limited to a long term infrastructure bond, if the borrowing is made on or after 1st day of October, 2014.  Further, the concluding date of the period of borrowings eligible for concession under Section 194LC which was earlier 01.07.2015 has been extended to borrowings made before the 1st day of July, 2017.

Therefore, the approval of the Central Government is further required in respect of long term bond issue and the rate of interest to be paid on such borrowings.

Considering the fact that there would be a large number of bond issues to be undertaken by Indian companies, providing a mechanism involving approval in each and every specific case would entail avoidable compliance burden on the borrower/issuer of bond.  In order to mitigate the compliance burden and hardship, the CBDT (with the approval of the central Government) coneys the approval of the central Government for the purposes of section 194LC in respect of the issue of long term bond including long term infrastructure bond by Indian companies which satisfy the following conditions:

• The bond issue is at any time on or after 1st day of October, 2014 but before the 1st day of July, 2014.
• The bond issue by the Indian company should comply with clause (d) of sub section (3) of section 6 of the foreign Exchange Management Act, 1999 read with Notification No. FEMA3/2000-RB viz. Foreign Exchange Management (Borrowing or Lending in Foreign exchange) Regulations 2000, dated May 3, 2000, as amended from time to time (hereafter referred to as "ECB regulations"), either under the automatic route or under the approval route.
• The bond issue should have a loan Registration Number issued by the RBI.
• The term "long term" means that the bond to be issued should have original maturity term of three years or more.

Further, the Central Government has also approved the interest rate of the purpose of section 194LC in respect of borrowing by way of issue of long term bond including long term infrastructure bond as any rate of interest which is withing the ALL-in-cost ceilings specified by the RBI under ECB regulations as applicable to the borrowing through a long term bond issue having regard to the tenure thereof.

In view of the above, any bond issue, which satisfies the above conditions, would be treated as approved by the Central Government for the purposes of section 194LC.

It is also clarified that consequent to the amendment to section 194 LC the approval of the Central Government contained in Circular No. 07/2012, in so far as they apply to borrowings by way of a loan arrangement, shall be valid for the borrowings made on or before 30/06/2017 instead of 30/06/2015 as emendation in the said Circular.


Download Circular (Click Here)

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Notified Cost Inflation Index for Financial Year 2014-15 and Asstt. Year 2015-15.

CBDT has notifies "1024" as Cost Inflation Index(CII) for Financial Year 2014-15. Cost Inflation Index is required when assessee calculate Long term capital gain under Income Tax Act.

The CBDT notification regarding Notified Cost Inflation Index for Financial Year 2014-15 is as under :

SECTION 48, EXPLANATION (v) OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - COMPUTATION OF - NOTIFIED COST INFLATION INDEX FOR FINANCIAL YEAR 2014-15

NOTIFICATION NO. 31/2014 [F. NO. 142/3/2014-TPL], DATED 11-6-2014

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (42 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:—

2. In the said notification, in the Table, after serial number 33 and the entries relating thereto, the following serial number and entries shall be inserted, namely:—

Sl. No.	Financial year	Cost Inflation Index
34	2014-15	1024

How to Calculate Long Term Capital Gains?

LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement + cost of transfer)

Where, Indexed cost of acquisition =Cost of acquisition x CII of year of transfer /CII of year of acquisition

Indexed cost of improvement =Cost of improvement x CII of year of transfer /CII of year of improvement

CII = Cost Inflation Index (Please see chart given below)

Tax liability on LTCG to be taken at 20%.

If total income other than LTCG is less than zero slab,LTCG over the zero slab only attracts tax at 20%.

Updated last 33 years Cost Inflation Index (Click Here)

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Can Taxpayee claimed Deductions of Home Loan & House Rent Allowances simultaneously ?

Long Term Capital Gain (LTCG) is to be calculated by deducting the following from the full value consideration:

1. Indexed cost of Acquisition [Cost Inflation Index (CII) for the FY 2002-03 is “447” whereas same for the FY 2014-15 has not yet been notified]
2. Indexed cost of Improvement [Cost Inflation Index (CII) for the FY 2007-08 is “551”]

   

Further deduction is also available towards the expenses incurred WHOLLY & EXCLUSIVELY in connection with the transfer like brokerage, legal charges etc.

The expenses towards stamp duty & registration charges would form the part of cost of acquisition whereas construction expenses incurred by availing housing loan would be treated as cost of improvement. The deduction towards further improvement coloring & furnishing in 2007-08 would be admissible on the basis of documentary evidences only. Without documentary evidences, the deduction could be denied.

Taxability of Long Term Capital Gain (LTCG) :

LTCG is taxable @ 20% u/s 112 of the Income Tax Act-1961.

Exemption against Long Term Capital Gain :

To Save LCTG tax by opting for an exemption u/s 54 or U/s 54EC, as under: -

• Exemption Under Section 54F:

Exemption u/s 54 is available if the taxpayer invests the amount of LTCG for purchase/construction of a house property. The time period within which investment should be done is as under:

• For Purchase: Within One year before or two years after the date of transfer; or
• For construction: Within a period of three years from the date of transfer.

[It may be noted that u/s 54, taxpayer is allowed 2 years for purchase and 3 years for construction of the house property. However, the capital gain tax on such transfer is taxable in the assessment year in which transfer took place and the return of income of that previous year has to be filed before the specified date i.e., due date. Hence, the tax payer has to take a decision for purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable. To enable the taxpayer to claim an exemption, Income Tax Act has specified an alternative in the form of Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS) for earmarking the amount for purchase/construction within specified time limit. The amount of LTCG which is not utilized by the taxpayer for purchase or constructions of the new house till due date has to be deposited under the CGDAS before the DUE DATE of furnishing the return of income. After deposits, the amount already utilized by the taxpayer for purchase/ constructions of the new house till due date, along with unutilized LTCG so deposited, shall be eligible for exemption u/s 54 in the year in which LTCG has arisen. Later on, whenever taxpayer purchase/ constructs the house property within a specified time slot, he can make payment from the CGDAS.]

• Exemption Under Section 54EC:

To claim an exemption u/s 54EC, taxpayer have to invests the amount of Long Term  Capital Gain in Specified bonds issued by the Rural Electrification Corporation (REC) or National Highway Authority of India (NHAI) within a period of 6 months from the date of transfer of assets.

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All about Long Term Capital Gain on Sale of Any Residential House Property.

Tax on Long Term Capital Gain (LTCG) on sale of any residential house property can be saved (U/s 54 of the Income Tax Act-1961) if the LTCG is invested within a prescribed time for purchase/ construction of a house property. The exemption u/s 54 would be available even if the taxpayer already owns another residential house property (i.e., exemption would be admissible even if second house property is purchased). Another option to save LTCG tax could be by investing the amount of LTCG within a period of 6 months from the date of transfer in the specified bonds issued by Rural Electrical Corporation (REC) or National Highway Authority of India (NHAI).

Time limit to Purchase the Property: Exemption u/s 54 is available

if the taxpayer invests the amount of LTCG for purchase/construction of a house property. The time period within which investment should be done is as under:

For Purchase: Within One year before or two years after the date of transfer; or

For construction: Within a period of three years from the date of transfer.

If you are planning to purchase a flat, you have to complete the transaction of purchase before 21.09.2015. Mere investment in plot is not sufficient for claiming an exemption u/s 54. However, if the house is constructed thereon then the cost of the plot would also be eligible for exemption u/s 54 along with construction cost.  

Scheme of Deposits: 

Even though u/s 54, taxpayer is allowed 2 years for purchase and 3 years for construction of the house property, the capital gain tax on such transfer is taxable in the previous year in which transfer took place. The return of income of that previous year has to be filed before the specified date i.e., due date. Hence, the tax payer has to take a decision for purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable. To cope up with such situation, Income Tax Act has specified an alternative in the form of Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS) for earmarking the amount for purchase/construction within specified time limit. The amount of LTCG which is not utilized by the taxpayer for purchase or constructions of the new house till due date has to be deposited under the CGDAS before the DUE DATE of furnishing the return of income. After deposits, the amount already utilized by the taxpayer for purchase/ constructions of the new house till due date, along with unutilized LTCG so deposited, shall be eligible for exemption u/s 54 in the year in which LTCG has arisen. Later on, whenever taxpayer purchase/ constructs the house property within a specified time slot, he can make payment from the CGDAS.

Exemption u/s 54 is available if the assessee invests the amount of LTCG for purchase of “a” residential house property. Interpretation of the word “a” is a matter of controversy. To be on a safer side, you are advised to invest the amount of LTCG in one house property only. You may further note that, for claiming an exemption u/s 54, you are required to invest the amount of LTCG only (not entire sale consideration of Rs. 29.99 Lacs). 

Registry Charges/Stamp Duty/Brokerage etc can be added to the cost of new flat for arriving at the amount of exemption u/s 54.

If you are not able to utilize entire LTCG for new house property, you can invest balance LTCG in the specified bonds issued by NHAI/REC. Exemption U/s 54 & U/s 54EC can be claimed simultaneously as well. If you are planning to invest in specified bonds, ensure to make the investment within a period of 6 months i.e., before 21.03.2014.

You can claim an exemption u/s 54 by booking a flat & making the payment in installment to the developer. After considering the amount paid to developer till due date of filing the return of income, ensure to deposit the balance of LTCG in CGDAS. Subsequent installment can be paid to the developer from CGDAS.

You can incorporate the name of your wife also in the sale deed for the name sake. Ensure to make the payment through your account only so that you would be able to prove that your wife don’t have any ownership stake in the property & her name is incorporated in the sale deed for the convenience only. 

If you are not sure of investing LTCG for purchase or construction, you can safely & timely think of claiming an exemption u/s 54EC by investing it in the specified bonds issued by NHAI/REC.

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How to save Tax on Long Term Capital Gain ?

Tax on Long Term Capital Gain (LTCG) on sale of any residential house property can be saved (U/s 54 of the Income Tax Act-1961) if the LTCG is invested within a prescribed time for purchase/ construction of a house property. The exemption u/s 54 would be available even if the taxpayer already owns another residential house property (i.e., exemption would be admissible even if second house property is purchased). Another option to save LTCG tax could be by investing the amount of LTCG within a period of 6 months from the date of transfer in the specified bonds issued by Rural Electrical Corporation (REC) or National Highway Authority of India (NHAI).
 

Time limit to Purchase the Property: Exemption u/s 54 is available if the taxpayer invests the amount of LTCG for purchase/construction of a house property. The time period within which investment should be done is as under:For Purchase: Within One year before or two years after the date of transfer; or
For construction: Within a period of three years from the date of transfer.

If Taxpayee are planning to purchase a flat and have to complete the transaction of purchase before 21.09.2015. Mere investment in plot is not sufficient for claiming an exemption u/s 54. However, if the house is constructed thereon then the cost of the plot would also be eligible for exemption u/s 54 along with construction cost.

Scheme of Deposits:

• Even though u/s 54, taxpayer is allowed 2 years for purchase and 3 years for construction of the house property, the capital gain tax on such transfer is taxable in the previous year in which transfer took place. The return of income of that previous year has to be filed before the specified date i.e., due date. Hence, the tax payer has to take a decision for purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable. To cope up with such situation, Income Tax Act has specified an alternative in the form of Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS) for earmarking the amount for purchase/construction within specified time limit. The amount of LTCG which is not utilized by the taxpayer for purchase or constructions of the new house till due date has to be deposited under the CGDAS before the DUE DATE of furnishing the return of income. After deposits, the amount already utilized by the taxpayer for purchase/ constructions of the new house till due date, along with unutilized LTCG so deposited, shall be eligible for exemption u/s 54 in the year in which LTCG has arisen. Later on, whenever taxpayer purchase/ constructs the house property within a specified time slot, he can make payment from the CGDAS.
• Exemption u/s 54 is available if the assessee invests the amount of LTCG for purchase of “a” residential house property. Interpretation of the word “a” is a matter of controversy. To be on a safer side, taxpayee are advised to invest the amount of LTCG in one house property only. Taxpayee may further note that, for claiming an exemption u/s 54, Taxpayee are required to invest the amount of LTCG only (not entire sale consideration of Rs. 29.99 Lacs).
• Registry Charges/Stamp Duty/Brokerage etc can be added to the cost of new flat for arriving at the amount of exemption u/s 54.
• If Taxpayee are not able to utilize entire LTCG for new house property, Taxpayee can invest balance LTCG in the specified bonds issued by NHAI/REC. Exemption U/s 54 & U/s 54EC can be claimed simultaneously as well. If Taxpayee are planning to invest in specified bonds, ensure to make the investment within a period of 6 months i.e., before 21.03.2014.
• Taxpayee can claim an exemption u/s 54 by booking a flat & making the payment in installment to the developer. After considering the amount paid to developer till due date of filing the return of income, ensure to deposit the balance of LTCG in CGDAS. Subsequent installment can be paid to the developer from CGDAS.
• Taxpayee can incorporate the name of Taxpayee'r wife also in the sale deed for the name sake. Ensure to make the payment through Taxpayee'r account only so that Taxpayee would be able to prove that Taxpayee'r wife don’t have any ownership stake in the property & her name is incorporated in the sale deed for the convenience only.
• If Taxpayee are not sure of investing LTCG for purchase or construction, Taxpayee can safely & timely think of claiming an exemption u/s 54EC by investing it in the specified bonds issued by NHAI/REC.

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Tax Liability on Sale of Agricultural Land and Plot for Asstt. Year 2014-15.

TAX LIABILITY ON SALE OF AGRICULTURAL LAND

In normal course, any income from transfer of agricultural land, which is being used for agricultural purpose, shall be tax free if the agricultural land is not situated in any area within the distance (measured aerially) of not more than:

• 2 kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; or
• 6 kms, from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
• 8 kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.

If the agricultural land is situated within the radius of 2 kms/ 6 kms / 8 kms as mentioned above, then depending upon the period of holding, the profit arising on sale of agricultural land will be taxable as Long Term or Short Term Capital Gain.

In your specific case, if the agricultural land is not covered in the situation mentioned in (1) above then the profit arising on sale of agricultural land would be taxable as Long term Capital Gain as the agricultural land is having a holding period of more than 36 months. In absence of the exact reference of the date/financial year of acquisition in the query, Stamp Duty valuation of the land at the time of sale & also the non availability of the Cost Inflation Index (CII) for the FY 2013-14, the amount of Long Term Capital Gain could not be worked out. The CII for the FY 2013-14 has not yet been notified by the CBDT & it is expected that the same may be notified in this month itself.

TAX LIABLITY ON SALE OF PLOT

Suppose, the plot was purchased in 2011 and planning to sell it in the Fin. Year 2013-14. The profit on sale of plot would be a Long Term Capital Gain if it is sold after a holding period of more than 36 months. If the plot is sold within a period of 36 months, the profit would be treated as Short Term Capital Gain and for tax purpose, would be treated like your other regular income. It would be taxable as per the applicable tax slab to your income. Since you are ultimately planning to utilize sale proceeds for purchase of a residential house property, it is advisable to sell the plot after completing the holding period of 36 months so as to claim tax benefit conferred by section 54F.

In absence of the exact reference of the date/financial year of acquisition in the query, Stamp Duty valuation of the plot at the time of sale etc, the amount of Capital Gain could not be worked out.

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Tax Liability if the Sale proceeds is utilized for purchase of a Residential House property

Subject to various other terms / stipulations, Tax on Long Term Capital Gain (LTCG) arising from the transfer of plot or urban agricultural land can be saved u/s 54F if the sale consideration is used for purchase of a residential house property within a prescribed period. The time limit prescribed for the purpose is:

For purchase:
One year before or two years from the date of Transfer.
 

For Constructions:
Three years from the date of Transfer.

It may be noted that although section 54F offers the time period of 2 years for purchase & 3 years for construction, the return of income is required to be filed before the specified date which is much shorter than the time period granted by Section 54F. If investment for purchase/ construction is not done by the tax payer before the due date of return filing, the amount need to be isolated by depositing it in the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). Readers who wish to claim an exemption u/s 54F may note that if the amount is not invested for purchase/construction before the DUE DATE of furnishing the return of income, then it should be deposited under the CGDAS, before the DUE DATE of furnishing the return. After Deposit, the amount already utilized by the tax payer for purchase/ constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen.

[Consequence where the amount deposited in the capital gain deposit account scheme is not utilized for the purchase or the construction of a residential house property within the specified period:
In this case, the amount not so utilized shall be charged as capital gain of the year in which the period of 3 years from the date of LTCG expires and it will be taxable as LTCG of that year. The assessee then shall be eligible to withdraw the amount from the scheme. As per scheme, he is required to submit an application in Form G after getting the approval of the Assessing Officer.]

With above basic idea, it may be noted that temporary parking of the funds in fixed deposits/ bonds / post office certificates after the due date of furnishing the return of income, may obstructs your exemption claim u/s 54F. If you have to claim an exemption u/s 54F, you have to choose CGDAS as an investment tool for temporary investments of the funds.

Source: The Hitwada

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Complete procedure for paying the TDS on purchase of Property into the Bank subsequently.

Using this facility deductor (Buyer) can furnish the details online and make the payment of taxes subsequently either through net-banking account or by visiting any of the authorized bank branches. Following are the steps to avail this facility:

Step 1:
a) Log on to NSDL-TIN website (www.tin-nsdl.com).
b) Click on the option “Furnish TDS on property”.
c) Select Form for Payment of TDS on purchase of Property.

Step 2:
After selecting the form you will be directed to the screen for entering certain information.

Example:
a) Permanent Account Number (PAN) of Property Purchaser and Seller.
b) Address of the Purchaser, Seller as well as the Property being purchased
c) Financial Year during which the Purchase has been made
d) Major Head Code - To indicate the type of tax applicable viz; Tax on companies/Tax on other than companies
e) Value of Property
f) Date of agreement/booking
g) Amount Paid/credited (Transaction amount)
h) Rate of TDS
i) TDS Amount
j) Dates of payment/credit, deduction
k) Select the option for “Payment of taxes immediately”

It is important to ensure that PAN of Buyer and Seller are correctly mentioned in the form. There is no online mechanism for subsequent rectification. Deductor will have to approach the Assessing Officer or CPC-TDS for rectification of errors.

Step 3:
After entering all the above detail, click on PROCEED button. The system will check the validity of PAN. In case PAN is not available in the database of the Income Tax Department then you cannot proceed with the payment of tax.

If PAN is available then TIN system will display the contents you have entered along with the “Name” appearing in the ITD database with respect the PAN entered by you.

Step 4:
You can now verify the details entered by you. In case you have made a mistake in data entry, click on "EDIT" to correct the same. If all the detail and name as per ITD is correct, click on "SUBMIT" button. Nine digit alpha numeric ACK no. will be generated and you will be provided with an option to print an Acknowledgment slip.

Please be informed that the name and status of PAN is as per the ITD PAN Master. You are required to verify the name before making payment. In case any discrepancy is observed, please confirm the PAN entered by you. Any change required in the name displayed as per the PAN Master can be updated by filling up the relevant change request forms for PAN. If the name is correct, then click on "Confirm".

Step 5:
With the printout of the Acknowledgment slip, you may visit any of the authorized Bank branches to make the payment of TDS subsequently. The Bank will make the payment through its netbanking facility and provide you the Challan counterfoil as acknowledgment for payment of taxes. Based on the information in the Acknowledgment slip, the bank will make the payment only through net-banking facility by visiting tin-nsdl.com and entering the acknowledgement number duly generated by TIN for the statement already filled by the buyer in respect of that transaction.

In case you desire to make the payment through e-tax payment (netbanking account) subsequently, you may access the link ‘View/Payment of TDS on property” on the TIN website. On entering the details as per the acknowledgment slip, you will be provided an option to submit to the bank wherein you have to select the Bank through which you desire to make the payment. You will be taken to the netbanking login screen wherein you can make the payment online.

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All about Capital Losses and Tax Liabilities.

It's never fun to lose money in an investment, but declaring a capital loss on your tax return can be an effective consolation prize in many cases. Capital losses have limited impact on earned income in subsequent tax years, but they can be fully applied against future capital gains. Investors who understand the rules of capital losses can often generate useful deductions with a few simple strategies.

The Basics
Capital losses are, of course, the opposite of capital gains. When a security or investment is sold for less than its original purchase price, then the dollar amount of difference is considered a capital loss. For tax purposes, capital losses are only reported on items that are intended to increase in value. They do not apply to items used for personal use such as automobiles (although the sale of a car at a profit is still considered taxable income).

Tax Rules
Capital losses are reportable as deductions on the investor’s tax return, just as capital gains must be reported as income. Unlike capital gains, capital losses can be divided into three categories. Realized losses occur on the actual sale of the asset or investment, whereas unrealized losses are not reportable.

Example
An investor buys a stock at $50 a share in May. By August, the share price has dropped to $30. The investor has an unrealized loss of $20 per share. He holds on to the stock until the following year, and the price climbs to $45 per share. He sells the stock at that point and realizes a loss of $5 per share. He can only report that loss in the year of sale; he cannot report the unrealized loss from the previous year.

The third category is recognizable gains. Although all capital gains realized in a given year must be reported for that year, there are some limits on the amount of capital losses that may be declared in a given year in some cases. While any loss can ultimately be netted against any capital gain realized in the same tax year, only $3,000 of capital loss can be deducted against earned or other types of income in a given year.

Example
Frank realized a capital gain of $10,000 in 2013. He also realized a loss of $30,000. He will be able to net $10,000 of his loss against his gain, but can only deduct an additional $3,000 of loss against his other income for that year. He can deduct the remaining $17,000 of loss in $3,000 increments every year from then on until the entire amount has been deducted. However, if he realizes a capital gain in a future year before he has exhausted this amount, then he can deduct the remaining loss against the gain. Therefore, if he deducts $3,000 of loss for the next two years and then realizes a $20,000 gain, he can deduct the remaining $11,000 of loss against that gain, leaving a taxable gain of only $9,000.

The Long and Short of It
Capital losses do mirror capital gains in their holding periods. An asset or investment that is held for a year to the day or less, and sold at a loss, will generate a short-term capital loss. A sale of any asset held for more than a year to the day, and sold at a loss, will generate a long-term loss. When capital gains and losses are reported on the tax return, the taxpayer must first categorize all gains and losses between long and short term, and then aggregate the total amounts for each of the four categories. Then the long-term gains and losses are netted against each other, and the same is done for short-term gains and losses. Then the net long-term gain or loss is netted against the net short-term gain or loss. This final net number is then reported on Form 1040.

Example
Frank has the following gains and losses from his stock trading for the year:
Short-term gains - $6,000
Long-term gains - $4,000
Short-term losses - $2,000
Long-term losses - $5,000
Net short-term gain/loss - $4,000 ST gain ($6,000 ST gain - $2,000 ST loss)
Net long-term gain/loss - $1,000 LT loss ($4,000 LT gain - $5,000 LT loss)
Final net gain/loss - $3,000 short-term gain ($4,000 ST gain - $1,000 LT loss)

Again, Frank can only deduct $3,000 of final net short- or long-term losses against other types of income for that year and must carry forward any remaining balance.

Tax Reporting
A new tax form was recently introduced. This form provides more detailed information to the IRS, so that it can compare gain and loss information with that reported by brokerage firms and investment companies. Form 8949 is now used to report net gains and losses, and the final net number from that form is then transposed to the newly revised Schedule D and then to the 1040.

Capital Loss Strategies
Although novice investors often panic when their holdings decline substantially in value, experienced investors who understand the tax rules are quick to liquidate their losers, at least for a short time, to generate capital losses. Smart investors also know that capital losses can save them more money in some situations than others. Capital losses that are used to offset long-term capital gains will not save taxpayers as much money as losses that offset short-term gains or other ordinary income. Wealthy taxpayers will now find capital losses more valuable than ever because of the capital gains rate increase for those in the top two brackets.

Wash Sale Rules
Investors who liquidate their losing positions must wait at least 31 days after the sale date before buying the same security back if they want to deduct the loss on their tax returns. If they buy back in before that time, the loss will be disallowed under the IRS wash sale rule. This rule may make it impractical for holders of volatile securities to attempt this strategy, because the price of the security may rise again substantially before the time period has been satisfied.

But there are ways to circumvent the wash sale rule in some cases. Savvy investors will often replace losing securities with either very similar or more promising alternatives that still meet their investment objectives. For example, an investor who holds a biotech stock that has tanked could liquidate this holding and purchase an ETF that invests in this sector as a replacement. The fund provides diversification in the biotech sector with the same degree of liquidity as the stock. Furthermore, the investor can purchase the fund immediately, because it is a different security than the stock and has a different ticker symbol. This strategy is thus exempt from the wash sale rule, as it only applies to sales and purchases of identical securities.

The Bottom Line
Capital losses make it possible for investors to recoup at least part of their losses on their tax returns by offsetting capital gains and other forms of income. For more information on capital losses, download the Schedule D instructions from the IRS website at www.irs.gov or consult your financial advisor.

Source : Yahoo Finance

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Latest Cost Inflation Index for Assessment Year 2014-15

CLAUSE (V) OF THE EXPLANATION TO SECTION 48 OF THE INCOME TAX ACT, 1961 (43 OF 1961)
CAPITAL GAINS - COMPUTATION OF - NOTIFIED COST INFLATION INDEX FOR FINANCIAL YEAR 2013-14

CBDT has declared Cost Inflation Index for Financial Year 2013-14.  If Taxpayee have invest more than one year Short-Term Capital Assets then he needs of Cost Inflation Index value to calculte capital gain, cost of acquisition and cost of improvement may be indexed, if required, on the basis of following cost inflation index notified by the Central Government for this purpose. The assets having more than 3 years period consider as Long Term Capital Gain.

S.O. 1464(E) - In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), Central Board of Direct Taxes published in the Gazette of India, Extraordinary, vide number S.O. 709(E), dated the 20th August, 1998, namely:-

2. In the said notification, in the Table, after serial number 32 and the entries relating thereto, the following serial number and entries shall be inserted, namely:-

Sl. No.	Financial year	Cost Inflation Index
33	2013-14	939

How to Calculate Long Term Capital Gains?

LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement + cost of transfer)

Where, Indexed cost of acquisition =Cost of acquisition x CII of year of transfer /CII of year of acquisition

Indexed cost of improvement =Cost of improvement x CII of year of transfer /CII of year of improvement

CII = Cost Inflation Index (Please see chart given below)

Tax liability on LTCG to be taken at 20%.

If total income other than LTCG is less than zero slab,LTCG over the zero slab only attracts tax at 20%.

See last 32 years Cost Inflection Index

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Tax Liability if the Sale proceeds is utilized for purchase of a Residential House property.

Subject to various other terms / stipulations, Tax on Long Term Capital Gain (LTCG) arising from the transfer of plot or urban agricultural land can be saved u/s 54F if the sale consideration is used for purchase of a residential house property within a prescribed period. The time limit prescribed for the purpose is:
 

For purchase:
One year before or two years from the date of Transfer.

For Constructions:
Three years from the date of Transfer.

It may be noted that although section 54F offers the time period of 2 years for purchase & 3 years for construction, the return of income is required to be filed before the specified date which is much shorter than the time period granted by Section 54F. If investment for purchase/ construction is not done by the tax payer before the due date of return filing, the amount need to be isolated by depositing it in the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). Readers who wish to claim an exemption u/s 54F may note that if the amount is not invested for purchase/construction before the DUE DATE of furnishing the return of income, then it should be deposited under the CGDAS, before the DUE DATE of furnishing the return. After Deposit, the amount already utilized by the tax payer for purchase/ constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen.

[Consequence where the amount deposited in the capital gain deposit account scheme is not utilized for the purchase or the construction of a residential house property within the specified period:
In this case, the amount not so utilized shall be charged as capital gain of the year in which the period of 3 years from the date of LTCG expires and it will be taxable as LTCG of that year. The assessee then shall be eligible to withdraw the amount from the scheme. As per scheme, he is required to submit an application in Form G after getting the approval of the Assessing Officer.]
With above basic idea, it may be noted that temporary parking of the funds in fixed deposits/ bonds / post office certificates after the due date of furnishing the return of income, may obstructs your exemption claim u/s 54F. If you have to claim an exemption u/s 54F, you have to choose CGDAS as an investment tool for temporary investments of the funds.

Source: The Hitwada

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Tax Liability on Sale of Agricultural Land or Plot.

In normal course, any income from transfer of agricultural land, which is being used for agricultural purpose, shall be tax free if the agricultural land is not situated in any area within the distance (measured aerially) of not more than:

• 2 kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; or
• 6 kms, from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
• 8 kms, from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.

If the agricultural land is situated within the radius of 2 kms/ 6 kms / 8 kms as mentioned above, then depending upon the period of holding, the profit arising on sale of agricultural land will be taxable as Long Term or Short Term Capital Gain.

If the Agricultural Land is not covered in the situation mentioned in (1) above then the profit arising on sale of agricultural land would be taxable as Long term Capital Gain as the agricultural land is having a holding period of more than 36 months. In absence of the exact reference of the date/financial year of acquisition in the query, Stamp Duty valuation of the land at the time of sale & also the non availability of the Cost Inflation Index (CII) for the FY 2013-14, the amount of Long Term Capital Gain could not be worked out. The CII for the FY 2013-14 has not yet been notified by the CBDT & it is expected that the same may be notified in this month itself.

If the profit on sale of Plot would be a Long Term Capital Gain, it is sold after a holding period of more than 36 months. If the plot is sold within a period of 36 months, the profit would be treated as Short Term Capital Gain and for tax purpose, would be treated like your other regular income. It would be taxable as per the applicable tax slab to your income. Since you are ultimately planning to utilize sale proceeds for purchase of a residential house property, it is advisable to sell the plot after completing the holding period of 36 months so as to claim tax benefit conferred by section 54F.

In absence of the exact reference of the date/financial year of acquisition in the query, Stamp Duty valuation of the plot at the time of sale etc, the amount of Capital Gain could not be worked out.

Source: The Hitwada

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Tax Liability if the Sale proceeds is utilized for purchase of a Residential House property.

Subject to various other terms / stipulations, Tax on Long Term Capital Gain (LTCG) arising from the transfer of plot or urban agricultural land can be saved u/s 54F if the sale consideration is used for purchase of a residential house property within a prescribed period. The time limit prescribed for the purpose is:
For purchase: One year before or two years from the date of Transfer.
For Constructions: Three years from the date of Transfer.

It may be noted that although section 54F offers the time period of 2 years for purchase & 3 years for construction, the return of income is required to be filed before the specified date which is much shorter than the time period granted by Section 54F. If investment for purchase/ construction is not done by the tax payer before the due date of return filing, the amount need to be isolated by depositing it in the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). Readers who wish to claim an exemption u/s 54F may note that if the amount is not invested for purchase/construction before the DUE DATE of furnishing the return of income, then it should be deposited under the CGDAS, before the DUE DATE of furnishing the return. After Deposit, the amount already utilized by the tax payer for purchase/ constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen.

[Consequence where the amount deposited in the capital gain deposit account scheme is not utilized for the purchase or the construction of a residential house property within the specified period:
In this case, the amount not so utilized shall be charged as capital gain of the year in which the period of 3 years from the date of LTCG expires and it will be taxable as LTCG of that year. The assessee then shall be eligible to withdraw the amount from the scheme. As per scheme, he is required to submit an application in Form G after getting the approval of the Assessing Officer.]

With above basic idea, it may be noted that temporary parking of the funds in fixed deposits/ bonds / post office certificates after the due date of furnishing the return of income, may obstructs your exemption claim u/s 54F. If you have to claim an exemption u/s 54F, you have to choose CGDAS as an investment tool for temporary investments of the funds.

Source: The Hitwada

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Tax Liability, If The Stamp Duty Valuation is Higher than Actual Sale Consideration.

“BUILDER ALSO LIABLE TO PAY TAX ON THE DIFFERENCE IF THE STAMP DUTY VALUATION IS HIGHER THAN THE ACTUAL SALE CONSIDERATION”

So far, section 50C (which provides for taxability of property on the basis of higher of Stamp duty valuation or the actual sale consideration) is applicable only when the capital asset is sold. It don’t have any application if the assets sold is not a capital assets i.e., it is not applicable when the stock in trade is sold by the tax payer. In short, Section 50C is not applicable to the builder since in most of the cases the assets/property is the part of stock in trade and resultantly the profit on sale of assets was taxable on the basis of actual sale consideration and not taxable on the basis of Stamp Duty Valuation of the property.
 

To bring land or building or both held as business assets within the scope of stamp duty value based taxation, the Finance Bill-2013 has proposes to incorporate a new section 43AC in the Income Tax Act-1961.  As a result of proposed insertion of Section 43AC, even the immoveable property forming the part of stock in trade would be taxable on the basis of Stamp Duty Valuation or Actual sale price, whichever is higher.
 

Exception:

• It is provided that where the tax payer claims before any assessing Officer that the value adopted or assessed or assessable by the authority under section 43CA(1) exceeds the fair market value of the property as on the date of transfer and the value so adopted etc by the authority under section 43CA(1) has not been disputed in any appeal or revision or no reference has been made before any other authority, the assessing officer may refer the valuation of the assets to the valuation officer. Where the value ascertained on reference to valuation officer exceeds the value assessed by the stamp valuation authority, the value so assessed shall be taken as the full value consideration.
• It is also proposed that where the date of an agreement fixing the value of consideration for the transfer of the assets and the date of registration of the transfer of the assets are not same, the stamp duty valuation may be taken as on the DATE OF THE AGREEMENT for transfer and not as on the date of registration for such transfer. However, this exception is applicable only where amount of consideration or part thereof for the transfer has been received by any mode other than cash on or before the date of agreement.

It’s true that the definition of Agricultural land is proposed to be amended by the Finance Bill-2013. Presently, Rural Agricultural Land is defined to mean land not situated in any area within the jurisdiction of a municipality or cantonment board having population of not less than ten thousand or in any area within such distance not exceeding eight kilometers from the local limits of any municipality or cantonment board as notified. For that purpose, the Central Government had issued Notification No SO – 9447 dated 06.01.1994. In that notification, more than 400 cities have been listed and corresponding relevant distances have been mentioned. Any transfer of agricultural land falling within the relevant distance of the cities mentioned in the notification would be subject to capital gains tax. It is to be noted that presently only notified areas were covered under the scope of agricultural land. Now, the definition is proposed to cover all areas whether notified or not. Moreover, various limits are proposed for land to qualify as a Rural Agricultural Land. A land will be considered as an “Rural Agricultural Land” if it is not situated in any area within the distance, measured aerially of not being more than:

• 2 kilometers, from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; or
• 6 kilometers, from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000; or
• 8 kilometers, from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.

 It is now further clarified that the distance has to be measured aerially. The amendments are proposed to take effect from 1st April, 2014 & will accordingly, apply in relation to assessment year 2014-15 and subsequent assessment years.
 

Source: The Hitwada.

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How Employee can takes benefit on Housing Loan of Employee's Co-operative Society ?

If the employee purchase the Land/House on Property Loan from Employee's Co-operative society against Rural Agricultural Land or Plot or House etc. they can be claimed exemption u/s. 54F towards Long Term Capital Gain (LTCG) as well as Employee can claiming deduction u/s 24(b) and u/s 80C towards the Interest and principal repayment of the loan. The second house property for which the loan is taken is belonging to your father and resultantly, you will not be eligible for any deduction u/s 24(b) & u/s 80C towards the interest & Principal repayment of the loan taken from your employee’s co-operative society. Net Sale Consideration is invested for purchase of another residential house property within a prescribed time.

Period to Purchase the Property:
Exemption u/s 54F is available if the Assessee invests net sale consideration for purchase of a residential house property

• within One year before or two years after the date of transfer; or
• constructs a residential house within a period of three years from the date of the transfer of the original house.

Deposits Scheme:
Although under section 54F, the taxpayer is allowed 2 years to purchase or 3 years for construction of the house property, but the capital gain on transfer of the original assets is taxable in the previous year in which the transfer took place. The return of income of that previous year is to be filed before the specified date i.e., due date. Hence, the assessee will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.

To avoid the above situation, the Income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). The amount of net sale consideration, which is not utilized by the assessee for purchase or constructions of the new house before the due date of furnishing the return of income, need to be deposited by him/her under the Capital Gain Accounts Scheme, before the DUE DATE of furnishing the return. After Deposits, the amount already utilized by the assessee for purchase/ constructions of the new house, along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen.

With above basic idea and background, opinions on your specific queries are as under:

1. Though you have not purchased another residential house property within the prescribed time period, the amount should have been deposited by you in the CGDAS so as to enable you to claim the exemption. The first instance of payment thereafter should have been done by withdrawing from CGDAS A/c.
2. Alternatively, the payment (from PPF Withdrawals, Housing Loan etc) should have been completed before 31.07.2011. Depending upon your payment till 31.07.2011, you can have an option of claiming an exemption u/s 54F either fully or proportionately. Your part ownership in an existing house property with your husband would not have impaired your exemption claim u/s 54F. 
3. You don’t have any option of buying another residential house property now as the time frame for investment has expired.

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Can we treated different Tax on Second House Property?

The Second house property which is on housing loan, the tax implication / housing loan benefit for the second house property is not similar & same as applicable to the first house property. The income from house property is taxable on the basis of its “Annual Value”. The term “Annual value” is elaborated hereunder. The second house property has a different tax treatment under the Income Tax Act-1961.

One house used by the tax payer for his/her own residence does not yield any taxable income as its annual value could be treated as Nil. Where the assessee owns only one house property and it cannot actually be occupied by him because it is situated at a place other than a place where he is employed or carries on business or profession, in such a case also the annual value of the property could be taken as Nil provided the property is not actually let out.

If taxpayers have two or more houses which are used for own use/ purpose, then assessee have the option to choose one of the house (according to his own choice) as self-occupied house, for which an assessee would like to get an exemption from tax and its annual value will be considered as Nil. The second house (or other houses) shall be deemed to be have to been let out [whether or not actually let out].

ANNUAL VALUE:  The annual value means the amount for which the property might reasonably be expected to be let out from year to year. However, if the actual rent received or receivable in respect of any let out property is higher, it shall be treated as its Annual Value. The annual value is always taken to be NIL in case of one self-occupied property.
 

Annual value of property is considered as higher of the following:

• Actual rent received a year;
• Reasonable expected rent of the property.

[ The reasonable expected rent is deemed to be the sum for which the property might reasonable be expected to be let out from year to year and is normally higher of  (a) municipal value; (b) fair rent. However, if the property is covered by a Rent Control Act, then the amount so computed cannot exceed the Standard Rent determinable under the Rent Control Act.]
 

As mentioned earlier, the assessee has the option to choose only one house as self-occupied property. Rest of property is assessable to income tax on the basis of its annual value.
 

DEDUCTIONS: From the annual value the following deductions are available under the Income Tax Act: -

• Municipal Tax paid.
• 30% of the net annual value of the house property towards Repair & Maintenance charges (Deduction is fixed @ 30% whether assessee incurs more or less amount on repair and maintenance of the house).
• Actual Interest paid on housing loan whether house is actually let out or is deemed to be let-out.
• For self-occupied property, maximum interest on housing loan is restricted to Rs. 1,50,000/- p.a., subject to certain other stipulations.

Effectively, if Assessee owns more than one house property & is kept for own use/ purpose,  one house property, as per the choice of the Assessee, shall be treated as self occupied house property and the annual value shall be treated as Nil. Other house property shall be deemed to have been let out and the tax is payable on notional rent as the property is deemed to have been let out and is taxable on the basis elaborated above. In respect of such deemed let out house property, one can claim interest as deduction u/s 24(b) without any monetary limit.
 

However, for the second house property, no deduction is available for repayment towards the principal portion of housing loan under section 80C as clause ( xviii) to section 80C of the I T Act reads as under:
"(xviii) for the purposes of purchase or construction of ‘a’ residential house property the income from ....."
The income tax forms for the FY 2012-13 have not yet been notified & I will highlight the form to be used by various class of assessee after the same is notified.

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Exemption u/s. 54 to Self and Benefit of Housing Loan to Legal Hairs.

An exemption u/s 54 can be claimed on the amount of Long Term Capital Gain (LTCG) arising from the sale of the house property. For exemption, taxpayer has to invest the amount of LTCG for purchase or construction of another residential house property within a prescribed period. In your specific case, you have earned the amount of LTCG on sale of house property whereas the house property is sought be purchased in the name of your son so as to enable him to claim the income tax benefit on the housing loan to be availed for the balance amount (Rs. 9 Lacs).
To be precise, you want

• to claim exemption towards the entire amount of LTCG arising from the transfer of your first house property and
• to have the benefit on housing loan to your son as he will be having taxable income after your retirement and he will be repaying the amount of housing loan from his income.

For claiming an exemption u/s 54 in your hands AND future benefit of interest & principal repayment by your son, the new house property should be purchased in the joint ownership. The new house property should clearly incorporate the ownership ratio of the joint owners. Your share in the new house property should be more than the amount of LTCG and the share of your son should exceeds the amount of Housing loan sought to be availed by him and the housing loan should be recorded as his contribution in the house property.

Source: The Hitwada

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Calculat LTGC & Chart of Cost Inflation Index For Asstt. Year 2013-14

CBDT has declared awaited Cost Inflation Index for Financial Year 2012-13. The CII is used in claculation of Long Term Capital Gain on Sale of Capital Consideration. If you have invest more than one year Short-Term Capital Assets then you in need of Cost Inflation Index Chart for computing long-term capital gain, cost of acquisition and cost of improvement may be indexed, if required, on the basis of following cost inflation index notified by the Central Government for this purpose. The assets having more than 3 years period consider as Long Term Capital Gain.

Calculation of Long Term Capital Gains (LTCG))

Long Term Capital Gains is computed as below :

LTCG = Full value of consideration received or accruing - (indexed cost of acquisition + indexed cost of improvement + cost of transfer)

Where, Indexed cost of acquisition =Cost of acquisition x CII of year of transfer /CII of year of acquisition

Indexed cost of improvement =Cost of improvement x CII of year of transfer /CII of year of improvement

CII = Cost Inflation Index (Please see chart given below)

Tax liability on LTCG to be taken at 20%.

If total income other than LTCG is less than zero slab,LTCG over the zero slab only attracts tax at 20%.

The following chart showing 32 years Cost of Inflection Index:

Gsoftnet www.gsoftnet.blogspot.com
Cost Inflation Index Chart
Sl. No.	Financial Year	CII= Cost Inflation Index	Sl. No.	Financial Year	CII= Cost Inflation Index
1	1981-82	100	17	1997-98	331
2	1982-83	109	18	1998-99	351
3	1983-84	116	19	1999-00	389
4	1984-85	125	20	2000-01	406
5	1985-86	133	21	2001-02	426
6	1986-87	140	22	2002-03	447
7	1987-88	150	23	2003-04	463
8	1988-89	161	24	2004-05	480
9	1989-90	172	25	2005-06	497
10	1990-91	182	26	2006-07	519
11	1991-92	199	27	2007-08	551
12	1992-93	223	28	2008-09	582
13	1993-94	244	29	2009-10	632
14	1994-95	259	30	2010-11	711
15	1995-96	281	31	2011-12	785
16	1996-97	305	32	2012-13	852

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