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Category: capital gain

Save tax on sell of house property by sec 54

 Long term capital gain is taxed at 20%.The rate is high and as a taxpayer or professional, you should be aware of saving long term capital gain by using sec 54. Here I have tried to explain main points of section 54 through questions and answers. Who can claim deduction u/s 54? Only individual and HUF can take benefit of section 54.. For which transaction exemption u/s  54 is allowed? Section 54 can help to save the tax when any residential house is transferred and the asset should be long term asset. It means that you have owned the residential house for more than 3 years from the date of transfer. Which asset should be purchased? You have to purchase another residential house within 1 year before the date of transfer or within 2 years after the transfer. The deduction is also available if you construct the residential house within 3 years from the date of transfer.Cost of plot can be included as cost of new residential house. How much exemption is allowed? Exemption is allowed up to the least of following: cost of the new residential house capital gain. What if you purchase or construct two new residential houses? The exemption is available to only one unit. But you can choose for which house you are seeking exemption. Obviously, you will choose the house which has more cost....

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Easy way to understand capital gain tax india

What is capital gain tax? Capital gain is one of the head of income tax . Capital gain tax is levied on gain on transferring assets. Asset must be included in definition of capital asset as per section 2(14). Definition: “Capital asset” means Property of any kind held by an assessee, whether or not connected with his business or profession, but does not include the following: 1.     Stock in trade, raw materials, and consumable stores held for the purposes of business or profession. so if you are selling stock, capital gain tax will not arisen. 2.     Personal effects of movable nature, such as furniture, utensils, and vehicles held for personal use by the assessee or any dependent member of the family: Kindly note that transfer of personal effects like jewelry, archaeological collections, drawings, paintings, sculptures or any work of art is taxable. 3.     Agricultural land in India which is situated in any rural area.           Specified area means  Any asset situated within the jurisdiction of municipality and its population should be less than 10000 as per last census. If not situated within jurisdiction of municipality, it should be situated under certain kilometers specified by central government.            So tax is not levied on transfer of rural agricultural land.      4. Gold bonds issued by government of India including gold deposit...

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