Capital gains taxed at 20%

QI have inherited a house in financial year 2003-04 through the will of my father. This property was inherited by my father during FY 1992-93 from my grandfather after the latter’s death. I have disposed off this property for a sale consideration of `55 lakh in February 2017. I want to know the amount of capital gain tax on the amount as I am planning to hand over this money to my sons for the purpose of business.

According to Section 49(1), if the capital asset became the property of the assessee:

(i) on any distribution of assets on the total or partial partition of a Hindu undivided family: (ii) by succession, inheritance or devolution, (iii) under a gift or will. The cost of acquisition of the asset will be deemed to be the cost for which the previous owner of the property acquired it, as increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee, as case may be.

Therefore, if the capital asset becomes the property of the assessee before April 1, 1981, the cost of acquisition would be the actual cost to the assessee or its fair market value as on April 1, 1981 at the option of the assessee.

If the capital asset became the property of the assessee by any of the modes specified in Section 49(1), it is clear that the cost of acquisition to the assessee will be the cost of acquisition to the previous owner. Even in such cases, where the capital asset became the property of the previous owner before 1-41981, the assessee has the right to opt for the fair market value as on April 1, 1981.

As the asset sold is a long term capital asset, capital gain tax shall be payable at the rate of 20.6 per cent on the difference between the net sale consideration received on the sale of the property minus the indexed cost of acquisition of the property after applying the cost inflation index.

The exact tax calculation could not be worked out as your query is silent on the date of purchase and cost of acquisition of property. However, LTCG can be calculated by applying the relevant provisions mentioned above.

It is pertinent to note that the Finance Bill 2017 has made amendments by shifting the base year date from 1-4-1981 to 1-4-2001, thereby benefitting lot of assessees on the sale of immovable property. It had also by reduced the period of holding of an asset to qualify as long term capital asset from 36 months to 24 months. However, these provisions will be applicable from FY 2017-18 onwards.

QIt is understood that TDS is deducted from bank deposits if it crosses `10,000 in a financial year, if the depositor did not submit Form 15G/H. If the interest on bank deposit is `15,000 in a financial year and Form 15G/H was not given, would tax be deducted on the entire interest amount of `15,000 or only on the excess of `10,000 — i.e. `5,000. VINAY BANDARI Via email

Tax is required to be deducted at source on payment/credit of income by way of interest from bank if it exceeds `10,000. Therefore, TDS will be deducted on the entire interest paid or credited during the year if the aggregate interest exceeds the limit specified above. It may also be noted that non-furnishing of PAN particulars will attract a higher rate of tax deduction at the rate of 20 per cent.

THE UNION FINANCE BILL 2017 HAS MADE AMENDMENT BY SHIFTING THE BASE YEAR DATE FROM APRIL 1981 TO APRIL 2001