If I sell shares of Company A at a profit of Rs 1,80,000 and of Company B at a loss of Rs 50,000 (both long term), I understand that in this case, I need to pay LTCG tax on Rs 30,000 (amount above Rs 1 lakh). Suppose I buy these two shares back again within a week, will there be any additional tax implications?
Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP replies, “Yes. As per Sec 112A, capital gains on sale of shares (net off Company A and Company B), exceeding Rs 1 lakh, would be taxable at 10% without the benefit of indexation. Thus, Rs 30,000 shall be taxable in your hands. The purchase of the same shares after one week would not have any separate tax implications. Consequently, if the same is sold again and gains are realised, capital gains would be chargeable to tax, either short term or long term, depending on the period of holding.”
I am planning to sell my old house, constructed in 1992. I want to buy a flat with the entire sale amount and with some savings of mine. Will there be any capital gains tax involved in this? I own another flat jointly with my brothers. I have also inherited a plot with my brothers after my father’s death.
Amit Maheshwari, Partner, AKM Global replies: “A sale of a residential house is a sale of a capital asset, and the profit, in this case, will get taxed as a long term capital gain after the indexation of cost. The Income-tax Act allows taxpayers to claim certain exemptions against capital gains. We understand in the given case, as you plan to buy a flat with the entire sale amount; you can avail exemption u/s 54 of the Act wherein the new residential property must be purchased either 1 year before the sale or 2 years after the sale of the old property. You will be able to take this exemption and no tax on capital gains will be levied. However, if you don’t buy the house by the due date of filing the tax return, you will need to deposit the capital gains amount in the capital gains account scheme. Further, you are not allowed to sell this house within 3 years of purchase otherwise the exemption taken shall be reversed.”