HT Estates - - HTESTATES - Harsh Roongta

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.

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