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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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