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Business News/ Money / Calculators/  Invest in particular products to save on capital gains tax

Invest in particular products to save on capital gains tax

A residential house and bonds issued by NHAI or REC are some examples


I have a property in India that I have held for 10 years. I want to sell it now. What will be the tax liability? Is there any way I can save on tax on the gains made?


Since the property has been held by you for more than 10 years, the gains arising from its sale will be considered as long-term capital gains (LTCG).

LTCG is computed by deducting the indexed cost of acquisition from the sale consideration received and the gains would be taxed at the rate of 20% plus applicable surcharge and education cess. However, you may note that the taxability of the gains arising from the sale of the property will also depend upon your residential status and the availability of benefits (if any) under the applicable double taxation avoidance agreement (DTAA). You may consult your tax adviser with specific facts to examine the above aspects.

Assuming that the gains are taxable in India, you could consider re-investing the capital gains or the net consideration (as the case may be) arising from sale in the following assets to claim exemption from capital gains tax:

a) Residential house;

b) Bonds issued by National Highways Authority of India or Rural Electrification Corp. Ltd, which are redeemable after three years.

These exemptions are subject to certain conditions. You could consult your tax adviser with specific facts of the case for examining the eligibility of the above exemptions.

I am a non-resident India (NRI) and I earn interest on my money in the bank account in India. The bank cuts tax deducted at source (TDS). How can I claim tax refund on the TDS?


If your total taxable income earned in India for a relevant assessment year (AY) does not exceed the maximum amount that is not chargeable to tax in India, then the entire amount of TDS cut by the bank on the interest income can be claimed as refund by filing the return of income for the relevant AY within the prescribed due date. The due date for filing the return of income for an individual is 31 July of the AY. However, the refund can be claimed even by filing a belated return of income within a period of one year from the end of the relevant AY.

If your total taxable income exceeds the basic exemption limit, then the TDS deducted by the bank can be claimed as credit in the return of income against the tax payable and the balance will have to be discharged by way of self-assessment tax.

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Published: 19 Mar 2015, 07:27 PM IST
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