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Gains or losses arising on transfer of property are subject to tax under the head of ‘capital gains’.
According to the Income Tax Act, a ‘capital asset’ means property of any kind held by a person, irrespective of whether it is connected to his business or profession.
It does not include certain items like stock-intrade, consumable store or raw material for business, personal effects, and certain agricultural land.
Any real estate, including a flat, site, farmhouse, commercial property, etc, are all subject to capital gains on sale or transfer.
It is not only sale of property that attracts capital gains. Even certain specified transfers are deemed as sale and any gain arising is subject to capital gains tax. Transfer of property means conveying property, in present or in future, to one or more people.
The income arising on transfer of a capital asset is subject to capital gains tax — if there is a transfer of a capital asset during the previous year. Transfer will be deemed to have taken place on the date on which the possession is handed over. In case the payment has been received, but the transfer not effected yet, it will not be treated as a sale transaction.
Under the income tax laws, a capital asset may be a long-term capital asset or a short-term capital asset. In case a property is held for more than 36 months, the capital gains arising from it are treated as longterm capital gains. In case a property is transferred or sold after holding it for less than 36 months, the income will be treated as shortterm capital gains, and vice versa for capital loss.
It is to be noted that this is different from the provisions applicable to securities including shares and mutual fund units, where the qualifying period for long-term capital gains is over 12 months.
The period of holding determines taxability — whether it is a long-term capital asset or a shortterm capital asset — and accordingly whether you have incurred a long-term or short-term capital gains or loss.
The amount of capital gains is arrived at by applying the concept of Cost Inflation Index (CII). The index is published by the I-T department. The present worth of a property is arrived at by applying the CII to the cost of the property as well as any improvements made to it. This is deducted from the consideration amount received to arrive at the capital gains.
If the amount of the capital gains is equal to or less than the cost of the new property, the capital gains will not be charged to tax. For the purpose of computing, in respect of the new property, any capital gains arising from its transfer within a period of three years of its purchase or construction, the cost will be reduced by the amount of the capital gains.
A capital loss, whether short-term or long-term, can be carried forward and set off for the next eight years. After eight years, it lapses and cannot be carried forward any more.
You may save tax in respect of long-term capital gains by investing the gains in a residential property or in capital gains bonds. It needs to be ensured that the conditions prescribed under the relevant section are strictly complied with. Otherwise, the amount claimed as exempt can be made subject to tax.
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Babus in the central government have sought a unique compensation for vacating a plot of land at the Mumbai airport – get the company that owns the airport to build swanky sea-facing apartments for themselves in tony South Mumbai for free.
In a first-of-its-kind barter deal between the government and a private firm, Mumbai International Airport (MIAL), the company that operates Mumbai’s airport, has been asked by the Central Public Works Department to build a new tower at Hyderabad Estate on Nepean Sea Road, an office building in Kane Nagar near Dadar and a 50-apartment block near the airport in return for vacating a 13-acre airport land, where the department has had 278 houses and a few godowns for 50 years.
The prestigious Hyderabad Estate – where several top bureaucrats, including IAS officers, chief commissioners of income-tax as well as officers of the customs and excise departments, have lived for over four decades – is in an elite neighborhood that houses the residences of many of the country’s big industrialists. Apartments in this area sell for between 20 crore and 50 crore.
The government colony near the airport has a built-up space of 1, 67,174 sq ft, and as per the arrangement, MIAL will rebuild as much space for CPWD in the three locations. There will be no transaction, a senior official at the CPWD told ET, requesting not to be named.
He said the government is faced with a severe shortage of homes for its senior officers in Mumbai, where real estate prices have shot up in the past few years.
“A block of apartments on Nepean Sea Road, another 50 apartments near the airport and an office building – all for free – is what we thought is a damn good idea,” the senior CPWD official told ET.
GVK, which owns MIAL, did not respond to an emailed questionnaire.
Source: The Economics Times
Bangalore topped the chart of the11 city index at seven per cent increase followed by Gurgaon and Noida at five per cent. Mumbai and Kolkata registered a rise of four per cent each while Delhi and Ghaziabad saw a rise of three per cent each in the city index values.
Indicating a resurgence of the real estate market, the MagicBricks.com National Property Index (NPI) rose by three per cent in the January to March 2013 quarter. The NPI is a weighted average of city indices. The growth was tracked by PropIndex, a quarterly report which is based on dynamic data mined from the portal, to show the levels of supply and the type of property listed in each locality, in 11 cities across the country. These are cleaned with complex algorithms to remove outliers and arrive at the index values at locality, city and national levels.
Among the 11 cities tracked in the apartment index, eight have seen a rise but others registered a marginal drop in the city index. While Bangalore, Gurgaon, Noida, Mumbai, Kolkata, Delhi, Pune and Ghaziabad witnessed a rise in city index values, Chennai, Hyderabad and Ahmedabad recorded a 2-6 per cent drop during the quarter.
Bangalore topped the chart of the 11 city index with a 7 per cent increase followed by Gurgaon and Noida at 5 per cent rise each. Mumbai and Kolkata registered a rise of 4 per cent each while Delhi, Pune and Ghaziabad saw a rise of 3 per cent each in the city index values. Developers attribute the growth in Bangalore to increasing buyer confidence due to improved scenario in the IT sector. Upward price trends in 75 per cent localities of the city too pushed up the price monitor.
The Gurgaon and Noida index rose 5 per cent each during the January-March 2013 quarter. The upcoming sectors in Gurgaon undergoing a change in landscape with the development of residences, offices, commercial shops, recorded an appreciation of property prices. In Noida, the rise in average property prices in 89 per cent localities, led to a spurt in the listed price monitor. Sector 50, 62 and 61 remained the most preferred locality for consumers in this category, for buying and renting.
The Mumbai and Kolkata index rose 4 per cent each during the same quarter. Multi-storeyed apartments of 1-BHK units, continued to be most in demand, especially in Thane. Buyers’ budget preference analysis showed that property in the Rs 50-100 lakh range topped the consumer demand chart. In Kolkata, 63 per cent localities across the city witnessed positive trend in capital values.
The Delhi index registered a rise in index value by 3 per cent quarter-on- quarter in the past nine months. The listed price monitor showed that close to 59 per cent localities in the city witnessed an uptrend in average capital values. The Pune city index registered a 3 per cent growth rate quarter-on-quarter in the past six months. Most areas in the city witnessed an uptrend.
The Ghaziabad index witnessed a 3 per cent increase. Indirapuram, Raj Nagar Extension and Crossings Republik witnessed maximum buyer interest and remained the most active areas in the last six months.
The Ahmedabad city index recorded 2 per cent drop in the January-March 2013 quarter. Multi-storeyed apartments, especially 2-BHK units in the price range of Rs 20-30 lakh continued to witness maximum consumer demand.
The Chennai property index dropped by 6 per cent during the January-March 2013 quarter as compared to the previous quarter. The Chennai listed price monitor too reported a fall, primarily due to an oversupply in certain localities. The Hyderabad city index fell 3 per cent during the same quarter. In the last one year, the city has not witnessed any major expansion of IT/MNCs. There has been cautious buying by the existing IT population.
Key findings of PropIndex
• Residential property in the Rs 30-50 lakh range continued to top the consumer demand chart by (23 per cent).
• Premium residential properties in the Rs 2 crore and above range, witnessed healthy buyer interest (13 per cent).
• In spite of a cautious approach among buyers, listings price continued to remain up.
• Six out of 11 cities witnessed over 50 per cent demand for 2-BHK units.