Selling a residential plot...what are the tax implications?

letmein

letmein

Skilled
My uncle own a freehold plot in Greater Noida (part of Delhi-NCR). Being a senior citizen, with no dependents, he wants to sell it. What would be the tax implications in such a deal?

I want to know that in case he sells the plot for say, "Rs. 100" amount, he will have to pay a tax on the "100" amount (Long Term Capital Gains I guess.) But after he pays the tax on the 100 (let's say it's Rs. 10,) will he also have to pay personal income tax on the (100 - 10) = 90? Since he will have to declare the Rs. 90 as his income for the year?

Wouldn't this fall under double taxation?

Thanks for the help.
 
Nah.
Your uncle will have to pay tax on the Capital Gain {Sale Price minus [ ( Purchase price + Additions) * Index Rate] }.
If he has been holding land for a long time then it is Long Term Capital Gain else short term.
There are various deductions permissible for reducing this Tax, like reinvesting in other plots/house/land/some saving scheme.

On the receipt of this sale he will have to pay only for Capital Gains and no other personal Income Tax.
However lets say he has invested the sale proceeds in FD and earns fresh income out of it then he has to pay Income Tax on the same.
 
If he buys another residential plot and doesn't own any other residential plot he can avail tax rebate upto complete amount provided he invests his entire proceeds . Long term capital gains tax will be applicable @20% if it is held for more than 3 years .

Capital gains will be applicable on Indexed value less purchase price
 
?dOuBtFiRe? said:
Nah.
Your uncle will have to pay tax on the Capital Gain {Sale Price minus [ ( Purchase price + Additions) * Index Rate] }.
If he has been holding land for a long time then it is Long Term Capital Gain else short term.
There are various deductions permissible for reducing this Tax, like reinvesting in other plots/house/land/some saving scheme.

On the receipt of this sale he will have to pay only for Capital Gains and no other personal Income Tax.
However lets say he has invested the sale proceeds in FD and earns fresh income out of it then he has to pay Income Tax on the same.
Click to expand...

Thanks

He has the property for more than 15 years, so LTCG will apply.

He intends to invest it in a PSU bank FD since he does not want any risk and does not need high returns.

So as I understand he will only have to pay tax on the sale price of the plot, plus tax on the interest on FD he puts in for reinvestment.

Thanks again.
 
The tax is not on sale price (as per deed:)) but rather the gains/profit on the sale.
If you have any query, please post it. Also I suggest you contact your tax consultant for the tax workings on the Capital Gain, taking into account of TDS .

letmein said:
Thanks

He has the property for more than 15 years, so LTCG will apply.

He intends to invest it in a PSU bank FD since he does not want any risk and does not need high returns.

So as I understand he will only have to pay tax on the sale price of the plot, plus tax on the interest on FD he puts in for reinvestment.

Thanks again.
Click to expand...
 
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