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I have sold my house, resulting in a long-term capital gain of Rs 50 lakh. I will hand over the entire amount to my son who will invest it in a house (worth Rs 1.5 crore) within six months. Do I need to pay any tax on the gain?
— Rajkiran
According to provisions of the Income Tax Act, 1961, long-term capital gains (LTCG) from the sale of property shall be chargeable to tax in your hands. However, you can avail exemption by investing such LTCG in the purchase or construction of a new residential property within the timelines prescribed under section 54 of the Act.
We understand that you are gifting the sale proceeds to your son, who will invest the same in a residential property in his own name. In such a situation, since the new house will not be in your name, you cannot claim exemption as prescribed in section 54 of the Act.
In case you and your son jointly invest in the new property, i.e. you are a co-owner along with your son, then you can claim exemption under section 54, up to the amount of investment made by you in the new property, subject to other conditions prescribed.
Is long-term capital gains from the sale of jewellery taxable to an individual whose income is lower than the minimum taxable income? If yes, what is the rate of capital gains tax in this case?
— Kumaravelan
According to the provisions of the Income Tax Act, 1961, LTCG arising from the sale of jewellery is taxable in the hands of the seller. However, in the case of a resident individual, check if the total income reduced by such gains is below the maximum amount not chargeable to income tax. If yes, then such LTCG will be reduced by the amount by which the total income (as so reduced by the capital gains), falls short of the maximum amount not chargeable to income tax. The tax on the balance of such LTCG will be computed at the rate of 20 per cent (plus applicable surcharge and education cess). The maximum amount not chargeable to income tax is Rs 2,00,000 for FY2013-14 for an individual below 60 years of age.
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