Is Sec.80G applicable on LT Capital Gain
Querist :
Anonymous
(Querist) 18 March 2011
This query is : Resolved
Learned Experts kind opinion is requested in the following case.
One of my friend of Age 55 years has sold his flat at N.Delhi & got Long Term Capital Gain of Rs. 1.20 Crores in Oct2010 out of which he has purchased dwelling house costing Rs.1.15 Crores. From the balance Rs.5 Lakhs he has made donation of Rs.4 Lakhs which is exempted U/S 80 G of I.T Act. He has no other income. My question is
1) Will his donation of Rs.4 Lakhs u/s 80G be rebated from his balance of Capital Gain of Rs.5 Lakhs (i.e. after purchasing house for Rs.1.15 Crore out of LTCG of Rs.1.20 Crore) while computing his tax burden?
2) Is exemption u/s 80G applicable on the net total income including LTCG or all other income excluding LTCG?
R.Ramachandran
(Expert) 18 March 2011
Dear Mr. Anonymous,
The Long Term Capital Gain is the difference between the Sale price and the INDEXED cost of acquisition+cost of improvement to the property if any.
Only this difference is treated as Long Term Capital Gains Tax and is liable for 20% tax.
Therefore, first you have to be clear whether Rs. 1.2 crore was sale proceeds or Long Term Capital Gain.
In any case, Rs. 4 lakhs paid as donation would not be eligible for exemption against LTCGain. It can be availed only against other taxable income.
Guest
(Expert) 24 March 2011
you can also verify with the tax professional in www.CAclubindia.com
