Income including capital gain is below taxable limit. Is the capital gain taxable separately? - Q&A Forum

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GDR asked 4 years ago

Dear Sir,

This is in continuation to my earlier question regarding LTCG taxation on Sale of Inherited property, please advise me on the below matter:

Last year I filed ITR-4. As I have capital gain from inherited property in AY 2019-20, I have to file ITR-3.

In the AY 2019-20, My total gross income is Rs.179671/- (excluding capital gain) and deduction is of Housing Loan repayment Rs.154316/- = Net taxable income Rs.25355/-

I have capital gain of Rs.71201 (Inherited property Sale value Rs.247500/- sold in December, 2018) and I have not made any investment for deduction for this purpose.

Is there any tax liability?

Under the above circumstances, is the capital gain taxable?

Thanking you in anticipation

GDR

4 Answers

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Sreekanth Staff answered 4 years ago

Hi,
A resident individual can adjust the basic exemption limit against long term capital gains (LTCG). A resident individual can adjust the LTCG but such adjustment is possible only after making adjustment of other income. In other words, first income other than LTCG is to be adjusted against the basic exemption limit and then the remaining limit (if any) can be adjusted against LTCG.
Also, LTCG cannot be adjusted against the deductions under Chapter VI-A (80c….).

So, I believe the calculations can be like this;
Income Rs .179671 – Deductions = Rs 25355 is your taxable income.
Basic exemption limit – Taxable income = Rs 2.5 lakh – Rs 25355 = Rs 224645
You can then adjust LTCG from this ; Rs 224645 – Rs 71,201 and there is no tax liability.
You may kindly cross-check with a CA as well.

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GDR answered 4 years ago

Dear Sir,
The guidance given by you is correct and has improved my knowledge.
Thank you,
GDR

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Sreekanth Staff answered 4 years ago

Hi,
You may kindly go through my latest article related to this topic @
How to save Income Tax by adjusting Long Term Capital Gains against Basic Exemption Limit?

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nidhimehra answered 3 years ago

If your Capital gain is below the specified limit then you no need to pay any tax on the capital gain. Like if in equity mutual funds if you stand to gain the capital gain of 85,000 then you will not require any capital gain or taxes on this income.