Short Term Capital Gain
Querist :
Anonymous
(Querist) 22 December 2010
This query is : Resolved
hello gurus,
I need some help with calculating the STCG that I need to pay when selling a flat.
key dates
1. Flat Booking: March 2007
2. Flat Registry: March 2008
3. Flat Possession: March 2009
4. Flat Selling Date: Jan 2011 (probable)
Key Figures
1. Purchase Price: 18L
2. Own Contribution: 2L
3. Loan: 16L
4. Selling Price: 30L
5. EMI: 18K (for 3 Years)
Questions:
1. Does this fall under STCG?
2. If yes, which date is being considered (booking, registry, possession)? (this question has many different answers on the forum and therefore the repetition)
3. What is my tax liability due to this transaction?
4. How is it calculated?
5. Can I save the tax money using any instrument?
Please help me out so that I can take a proper and an informed decision. Also, thanks for helping me out.
*
A V Vishal
(Expert) 22 December 2010
Before replying to your query let me express my opinion on the situation in such cases. Three events -Booking ,Possession of flats and Registration are part of process of acquiring the flats from builders generally. The day you book the flat , the asset certainly is not created even by builder . So whatever money you give to builder ,in a way, is an advance only . However, when the flats are ready, the builder checks whether you have paid the agreed amount and once he finds that payment is already done, he hands over the flat to you. The registration of document of ownership takes time and generally happens much later than actual handing over of flats.The definition of transfer under I T Act is given u/s 2(47A) which under clause (v) recognise part performance as transfer of capital asset. The said clause is as under
(v) any transaction involving the allowing of the possession of any immovable
property to be taken or retained in part performance of a contract of the nature
In referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ;
In nutshell , if the payment has been done and possession has been taken, such an asset is considered transferred in the name of purchaser of the property. So, possession date, in my opinion , is the date from which three years should be counted.
In this background the flat was possessed only in 2009, hence the period of holding of 36 months prescribed under the act is not satisfied (If assuming that the date from registration is to be considered in such case also the mandatory period is not completed), hence it will be a STCG. Further the benefit of indexation and no exemption can be claimed on the sale, further the STCG will be Rs 12 lakhs and will be clubbed with other sources of incomes and taxed accordingly. In absence of details of other incomes and deductions u/s.80C it is not possible to determine your tax.
Querist :
Anonymous
(Querist) 24 December 2010
WoW! That is a lot of information. Many thanks for the information provided. You were a great help.
Also, are you a practicing CA?
If so, can you share your contact information with me so that I can contact you directly in future.
Finally, are you based in Pune (great if yes, otherwise no issues)?
