I bought a flat in 1991 for ₹ 3 lakh and converted it into freehold. I have been offered ₹ 1 crore for it. If I sell it this year, what will my capital gains liability be like? How do I pay capital gains?
—Sameer Sethi Firstly, flats can never be converted into freehold as these are constructed on the land owned by builder/developer in which the holder only becomes a shareholder.
Assuming that you got ₹ 1 crore by selling the flat bought in June 1991, you need to increase the historical cost by the inflation factor for the period of your holding. These indexed cost of acquisition in your case works out to ₹ 16.30 lakh. The capital gains accruing to you on sale of the flat will be ₹ 83.70 lakh (₹1 crore minus ₹ 16.30 lakh). Since the property has been in hold for more than three years, the capital gains will be in the nature of long term capital gains. You will be required to pay tax at the rate of 20.60% on capital gains of ₹ 83.70 lakh which comes to ₹ 17.25 lakh. You can pay your tax in Challan 280 in physical form or online. You can file your online return of income in Form No ITR-2.
However, if you re-invest the entire amount of long term capital gains of ₹ 83.70 lakh to purchase another residential house in India within two years of transfer of your original flat or for construction of residential house in India within three years of transfer of your original flat the entire amount of long term capital gains tax for ₹ 83.70 lakh will be exempt
u/s 54 of Income Tax Act. What happens to processing fees if I don’t avail the disbursement?
—Rohit Meena Most lenders do not refund the processing fees if you do not avail the disbursement after taking the sanction from them. However, some banks may refund part of the processing fee. In case the loan is not sanctioned, some lenders will refund the entire processing fee but others will either not refund anything at all or only refund a portion.