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At present in UNION BUDGET 2009-10 ( Dated: 6th July, 2009) they announced the Investment linked tax Incentives regarding the set up of "Businesses to be incentivised by providing investment linked tax exemptions rather than profit linked exemptions. Investment linked tax incentives to be
provided, to begin with, to the businesses of setting up and operating ‘cold chain’, warehousing facilities for storing agricultural produce and the business of laying
and operating cross country natural gas or crude or petroleum oil pipeline network for distribution on common carrier principle. Under this method, all capital
expenditure, other than expenditure on land, goodwill and financial instruments to be fully allowable as deduction".
Under this aspect we like to invest in Warehousing Facility but like to know is the depreciation i.e. 100% set off will be set off with the Warehouse( Sotrage) Income only or we can adjust from the other business profit in same books. Actually we are thinking to form new company for this warehouse to get this 100% Depreciation clause but it is fruitful only if the depreciation loss with be set off from other business profit in preceding year in same books of accounts.
Please give light to this matter your earlier & prompt reply will be highly appreciated.
Regards,
Sourabh Baheti
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Dear diamondlady, As u purchased the plot in march 2002 i.e. FY 2001-2002 & now u r selling it after 7 years in FY 2009-2010, ur total holding period is more than 3 years. hence ur gains `ll be considered as Long Term Capital Gains. Now u can claim benefit of indexation on this gain. Here is the tax calc. for u.
A. Original purchase price = 3L
B. Purchase FY = 2001-2002
C. Cost inflation index of 2001-2002 = 426
D. Sell FY = 2009-2010
E. CII of 2009-2010 = 632
F. Indexed purchase price = 3*632/426 = 4.45L
G. Sell price = 20L
H. Indexed LTCG = 20-4.45 = 15.55L
I. Tax on LTCG @ 20.6% = 3.2L
Plz. note ur marginal rate of tax is 30% but here the LTCG `ll be taxed @ 20.6%. To save on paying this LTCG tax amount, u have following options -
1. Invest the gain amount of 15.55L Rs. in Cap. gain saving bonds of NHAI or REC for 3 years.
2. Purchase a house for urself from gain amt. within next 2 years or construct one within next 3 years from the date of sell of ur plot.
Thanks
Ashal...
Reply to your question is available in the following clipping from the Hindu Businessline.
The gain arising from the sale of land will be taxable under the head capital gains. As you have held the land for more than 36 months, the gain will be treated as long-term capital gains.
Long-term capital gains are calculated by first deducting the expenditure incurred wholly and exclusively in connection with the transfer from the full value of consideration. From this amount, called net consideration, the indexed cost of acquisition is deducted to arrive at long-term capital gains.
The indexed cost of acquisition, in this case, is cost of acquisition multiplied by cost inflation index of financial year 2009-10, which is divided by cost inflation index of financial year 2001-02.
[The cost inflation index of financial year 2009-10 is 632 and the cost inflation index of financial year 2001-02 is 426]
Tax on the long-term capital gains is to be calculated at 20 per cent as increased by additional surcharge of 2 per cent and education cess of 1 per cent
Exemption u/s 54EC against the long-term capital gains is available on investment in bonds if the asset transferred is a long-term capital asset, the investment is in bonds of the NHAI or the Rural Electrification Corporation and the bonds are redeemable after three years.
For claiming exemption under section 54EC, the investment should be made before the expiry of six months from the date of transfer of the capital asset. In your case, the six-month period has expired and you cannot claim exemption u/s 54EC by investing in the bonds.
As far as investment in land is concerned, you cannot get any exemption unless a residential house is constructed on the land within the prescribed time.
Exemption can be availed u/s 54F if you propose to purchase a land and construct a residential house or purchase a flat if the assessee is an individual or HUF, the gain is from the transfer of a long-term capital asset that is not a house, the assessee does not within two years purchase or within three years construct a house other than the new house and the assessee is not the owner of more than one house (other than the new asset) on the date of transfer of the original asset.
For claiming exemption under sections 54F, the new residential house should have been purchased within a year or two years after the date of transfer or the construction of the new house should have been completed before the expiry of three years from the date of transfer of the capital asset.
For the purpose of claiming the exemption under section 54F, the amount not utilised for the purchase or construction of the new asset before the due date for furnishing the return of income for the relevant assessment year may be deposited before the due date for furnishing the return of income in any bank or institution in a specified account known as capital gains account scheme.
The proof of investing should be furnished along with the return of income for the amount to be considered to having been utilised for the purchase or construction of the asset.
The invested amount may be withdrawn for the purchase or construction of the new asset within the specified time.
If the invested money is not utilised within three years from the date of transfer of the original asset for investing in the new asset, it would be treated as income of the year in which the three-year period from the date of transfer of the original asset expires.
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I have sold my property after 36 months and the same has been reinvested / utilized recently for booking of new flat which will be constructed by 2011. My query is as under:
As per understanding with builder, I can request for cancellation of booking within 5-6 months if I am not satisfied with progress of construction and take back my money. In such a situation, can I go for purchase of other flat on resale. Will there be any tax liability on Long term capital gain reinvested and subsequently taken out for purchase of resale flat. Girish Kumar, Mumbai....
Dear Lakhotia Sir, I purchased a residential plot in March2002 for 3lakhs, registerred it in September2009. Now selling it for 20lakhs. what will be LTCG or STCG and tax for it?...
I am A marine engg. My NRI status depends on whether I have 184 days stay outside India. Can I open a PPF account.I am not NRI at present. And what are other TAX saving options.
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Purchased a residential plot for 3lakhs in march 2002, now selling for 20lakhs. What will impact on IncomeTax(30%slab), Wealth Tax, Capital Gain Tax ?...
Dear Pradeep, Here is the Tax calc. for u -
2nd property -
A. Purchase price = 5L
B. Purchase Financial year = 2004-2005
C. Cost inflation index of 2004-05 = 480
D. Sell Financial year = 2009-2010
E. CII of 2009-2010 = 632
F. Indexed Purchase price = 5*632/480 = 6.58L
G. Sell price = 15L
H. Indexed Long term capital gain = 15 - 6.58 = 8.42L
Now if u purchase a ready built property within next 2 year from the date of sell of ur 2nd property (till 28/07/2011) or construct a house within next 3years (till 28/07/2012) & use 8.42L Capital gain amount to invest in this new property u can save ur full LTCG Tax liability.
Now in context of ur full post or should i say next part of ur post that u intend to sell ur 1st property also, a tricky situation may arise - If u sell ur 1st property after purchasing ur 3rd property but within 1 year, u may partially adjust ur LTCG of 1st property against the purchase of this 3rd property.
It`s upto u how u use the situation to the max. for ur favor.
thanks
Ashal...
Dear Raja Tagu, U can continue ur PPF aact. till completion of first 15 years or ur current block of 5 years of extension if opted for after 15 years of acct.
Once 15Y or the block of 5Y extension completes, u can`t extend ur PPF account.
U may make fresh investment of 70K yly & may claim tax benefit on ur indian taxable income if any.
Thanks
Ashal ...
Purchased a residential plot for 3lakhs in March 2002 and now selling for 20lakhs. What will be impact on IncomeTax(30%bracket), Wealth Tax, Capital Gain Tax?...
Dear Mr. Pradeep,
The gains of Rs. 10 lacs on sale of II property will become taxable as long term gains after indexation benefits.
You can however escape tax totally, if you invest the entire gains (100%) on another property.
Yes, you can sell the first property whenever you choose. Again that will also invite capital gains tax subject to benefits being available (upto 31.3.2011) under Section 54.
No one can prevent you from repaying the homeloan taken for any property. You may be called upon to pay some amount towards pre closure of the loan account....
A small correction to my previous reply on the subject.
While pension is treated as salary, family pension paid to widows will be treated as income from other sources. 1/3rd of family pension (subject to Rs. 15,000 limit) will be allowed as deduction and only the balance counted for taxation limits.
First 1,80,000 of the total Indian income of a woman is not taxable. Beyond that tax is payable @ 10%.
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Pension including family pension paid to widows and widowers is treated as salary for taxation purposes.
Sub Section iia of Section 57 of Incometax Act, 1961 states as follows:
[(iia) in the case of income in the nature of family pension, a deduction of a sum equal to thirty-three and one-third per cent of such income or 11[fifteen] thousand rupees, whichever is less.
Explanation.For the purposes of this clause, family pension means a regular monthly amount payable by the employer to a person belonging to the family of an employee in the event of his death ;]
So after deduction of 1/3rd of the family pension (subject to a maximum of Rs. 15,000 per month), if the annual income exceeds the limits laid down for ladies, then only, your mother has to pay tax.
Please refine your question if you have any further doubts....
Dear Pervertedmoron!
As per existing forex rules, buying online lottery tickets is prohibited by the Reserve Bank of India.
I reproduce the relevant portions of RBI Master Circular on foreign exchange remittances below:
A.17 International Debit Cards
17.1 Banks authorised to deal in foreign exchange are issuing International Debit Cards (IDCs) which can be used by a resident for drawing cash or making payment to a merchant establishment overseas during his visit abroad. It is clarified that IDCs can be used only for permissible current account transactions and the item-wise limits as mentioned in the Schedules to Rules as amended from time to time, are equally applicable to payments made through use of these cards.
17.2 The IDCs cannot be used on internet for purchase of prohibited items like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, etc., i.e. for such items/activities for which drawal of foreign exchange is not permitted.
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Hi -
My mother is a widow and gets pension from Central Government on account of my fathers death. How is tax calculated on pension income to a widow ?...
