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Q |
Is it
necessary to obtain any permission, from the Income Tax authorities
if I want to purchase any immovable property ? |
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A |
There is
restriction on transfer of immovable property under Section 269UC of
the Income Tax act.
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Q |
Does the
Indian Income Tax Act offers any special incentive for purchase of
residential property by obtaining finance either from banks or other
financial institutions ? |
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A |
Under
Section 88 of the income tax you can claim benefit for the principle
repayment, interest on loan is deductible u/s 24 from income from
House Property.
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Q |
Whether
the benefits attached to a residential property are also available
to a commercial property ? |
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A |
No such
benefits are not available for commercial Properties.
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Q |
What are
the formalities specified under the Indian Income Tax Law, if any,
that one has to complete before or after selling any house property,
commercial or residential ? |
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A |
You have to
obtain Permission u/s 230A of the Income Tax Act if the value of the
property to be sold is more than 5 lakh.
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Q |
What are
the tax implications of sale of any house property, commercial or
residential ? |
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A |
You are
liable to pay Tax on profit arising from sale of a house property
under the head Capital Gain.
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Q |
Whether
incidental charges like brokerage, registration fees, stamp duty and
other charges arising out of sale of house property deductable from
profit arising on sale ? |
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A |
These
expenses are allowable expenses from the full value of consideration
of the sale of house property.
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| Q |
Is there
any way by which I can claim exemption from tax on capital gain ? |
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A |
The Income
Tax act has made provision u/s 54 & 54A--G of the act whereby
you can claim exemption from tax on capital gains.
Sec.
54: Purchase or construct another residential house worth the
amount of capital gains. Sec. 54 protects capital gains arising out
of sale (or transfer) of a residential house whether self-occupied
or not, provided the assessee has purchased within 1 year before or
2 years after the date of sale of the original asset or has
constructed within 3 years after that date, a residential house. The
only condition is that the newly-acquired property should not be
sold within 3 years from the date of its purchase or construction.
If this condition is not satisfied, the cost of the new asset is to
be reduced by the amount of long-term capital gains exempted from
tax on the original asset and the difference between its sale price
and the reduced cost will be chargeable as short-term (yes,
short-term!) capital gain earned during the year in which the new
asset is sold. This condition is unfair. One of my readers, Capt.
Shelar, had sold a house situated in a main city and purchased a
more spacious house in the suburbs. After moving in he found that
one of the neighbours is a goonda and another is running a brothel.
He desired to shift in a hurry but alas! He found himself trapped. Sec. 54EA & 54EB: Invest within 6 months the amount of
capital gains in avenues covered by Sec. 54EB which locks in the
funds for 7 years or invest the of sale proceeds in avenues covered
by Sec. 54EA which locks in the funds for 3 years. Sometimes the
same avenue also attracts tax rebate u/s 88. However, if the
assessee has availed of the Sec. 54EA/EB exemption from capital
gains by contributing a certain amount, the rebate u/s 88 will not
be allowed on the same amount and vice versa.
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