As per the sources available with www.propertykhazana.com, the options for capital gains tax in auction of the property is that the auction of the housing property draws the capital gains tax as for the provisions of Income Tax Act, where Housing Property is treated as Capital asset. There are 2 types of gains Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG) and the sale of the capital asset will be for more than 3 yrs which give rise to LTCG and draws CGT at 20% and in STCG it will be for less than 3 yrs and draws CGT at 30%. CGT can be reduced if the gains are reinvested as provided for and only LTCG be eligible for exception supply under Income Tax Act and not for STCG. CG is happening on account of auction of a house which is LTC asset and is owned by a Hindu Undivided Family (HUF) and covered by Section 54 and 54EC of IT Act.
CG is determined as per the supply of the IT Act are excused from IT or by National Highways Authority of India or by Rural Electrification Corporation Bonds. The greatest amount can be invested in these securities up to Rs. 50 Lakhs in a fiscal year and shall get returns of about 5.5-6%.
The property proprietor is free from deduction against the Municipal Tax paid for his property from the rent received and after deducting the rent he is also free from deduction of 30% of the rent received towards maintenance expenses. Payment must be made from money received in India through standard banking channels through inward payment from any locations outside India or in agreement with supply of the Act and the regulations which is made by RBI. It should not be made either through traveler’s cheques or by foreign currency. NRI or PIO may also buy the lands in India other than Agricultural Lands, Farm houses and Plantation Lands as the gift from a person who inhabitants in India or from a person of Indian origin inhabitant outside India, but NRI or PIO may give back the land in India to a person occupant.
How to choose a loan and how to decide on occupancy? Choosing a loan occupancy option depends on different factors such as person age, current economical condition, income earning, repayment capacity and whether he is an IT assessor or not. It differ from person to person depending on there necessities and on repayment capability. If the borrower is lesser in age can resort to a longer term and can also benefited by availing higher amount and in such cases EMI’s will be comparatively less. So, provisions will not be main issue and the cash extra available can be used for the other reasons. He will free from the deduction from rental income without any limits and the IT on the rental income from the resident will be decreased. Suppose if in case the co-borrowers who are also co-owners like husband and wife will go for a house loan together either to build of purchase the home and both are IT assesses and both are paying EMIs. In this case both are free to the benefits of Section 80C and 24 of the IT Act. Under the Section 80C the maximum deduction will be Rs. 1 Lakh and contributions to PF, LIC premium paid and investing in National Savings Certificate will also be considered along with refund of principal amount of the home loan. Same way there is also benefit against the interest on the home loans and if the property is self-occupied the amount is limited to Rs. 1.5 Lakhs and if in case the property is let out then the whole interest paid can be deducted from the rental income.
If NRIs and PIOs invest on the property in Bangalore then the payment should be made from their NRI accounts and the investments in property are covered by the supply of Foreign Exchange Management Act. For more details browse www.propertykhazana.com.
Source: NIMMA BENGALURU
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