Tax sop applies to pre-sale buy

Q Dividend received from Indian companies is liable to be taxed if it exceeds `1 lakh. Is this provision applicable for FY17-18 or FY18-19? RAKESH Ahmedabad A) The provision of taxing dividend has been inserted with effect from FY 2017-18 which provides that any income by way of aggregate dividend in excess of `10 lakh will be chargeable to tax in case of an individual, HUF or a firm who is resident in India, at the rate of 10 per cent.

Further, the taxation of dividend income in excess of `10 lakh will be on gross basis i.e., no deduction in respect of any expenditure or allowance or set-off of loss will be allowed to the assessee in computing the income by way of dividends. It may be noted that dividend in excess of `10 lakh (and not `1 lakh as mentioned in your query) is taxable at the rate of 10 per cent. Q I have booked a flat in Coimbatore for senior citizen’s assisted living (people often call it old age home) as my wife and I are both 70 years of age. So I want to sell my existing flat in Hyderabad. Both sale price of Hyderabad and purchase price of Coimbatore flat are approximately equal, say `40 lakhs. My question is:

The builder in Coimbatore had to be paid at various stages of construction from booking onwards but selling of my flat is yet to be done. So for few installments of payments I have borrowed from my own savings (terminal benefits when I retired) and my wife. Almost 50 per cent of the purchase cost is managed this way. How should I calculate capital gains tax when I eventually pay the builder completely and move in to new flat at Coimbatore? SOMA SUNDARAM Hyderabad A) Your query does not mention the time of purchase of your existing flat in Hyderabad which you are intending to sell. Assuming that the period of holding of the flat is more than 24 months, any gain arising on sale will be treated as long term capital gain (LTCG). Also the cost of inflation index can also be applied to the cost of purchase of the residential flat.

Any LTCG arising on sale of residential house will be exempt provided that the assessee has purchased within a period of one year before or two years after the date of transfer/sale of such asset, one residential house in India.

The Income Tax Act specifically provides that one residential house can be purchased even one year before the sale of residential house on which LTCG has arisen to claim the exemption. You however need to ensure that the residential house in Hyderabad is sold within one year of purchase of the residential house in Coimbatore.

You can avail exemption for capital gains tax if you have bought a house one year before the sale of existing house