File returns within due date to carry forward long-term losses

  • If the actual sale consideration is lower than the stamp duty value by over 5%, the stamp duty value would be regarded as the deemed sale consideration, for the purpose of calculating LTCG or LTCL
  • If you have held the immovable property for more than 24 months, the said property will qualify as a long- term capital asset

I bought my flat in December 2014 for 38 lakh inclusive of everything. I sold the flat in July 2018 incurring a huge loss of 30 lakh. Can I declare this loss in my income-tax return this year?

—Ranjan

As you have held the immovable property (flat) for more than 24 months, the said property will qualify as a long- term capital asset. The resultant gain or loss arising out of the sale of the said property would be taxable in your hands as long-term capital gains or loss (LTCG or LTCL).

LTCG is calculated as the difference between net sale consideration (actual sale consideration less brokerage expenses) and the indexed cost of acquisition and improvement. The indexed cost of acquisition would be calculated as cost of acquisition multiplied by the Cost Inflation Index (CII) of the year of purchase {cost in financial year (FY) 2014-15 x CII of FY19}. Please note that if the actual sale consideration is lower than the stamp duty value by more than 5%, the stamp duty value would be regarded as the deemed sale consideration, for the purpose of calculating such LTCG or LTCL.

The LTCL arising from the above transaction, can be set off against other LTCG, if any, in the said FY. The balance unadjusted LTCL can be carried forward for eight FYs immediately succeeding FY19 and can be set of only against LTCG arising in future.

Further, with respect to reporting in the India tax return form, as per the latest forms, once the details of sale consideration, indexed cost of acquisition etc. is mentioned in the Schedule CG of your tax return form for FY19, the loss shall be auto-computed and shown under Schedule CYLA and Schedule CFL of the tax return form.

Separately, it is also important to note that the India income-tax return for FY2018-19 would need to be filed on or before the applicable due date (i.e. 31 July or 30 September as the case maybe), for you to be eligible to carry forward the said LTCL from the sale of your house.

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India.

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