Income Tax- No tax relief on LTCG/STCG against property purchase – The Financial Express

Clipped from: https://www.financialexpress.com/money/income-tax/your-queries-income-tax-no-tax-relief-on-ltcg-stcg-against-property-purchase/2380285/

Hence, long-term capital gains are taxable at 20% (plus applicable surcharge and cess) or 10% for gains in excess of Rs 1 lakh on transfer of listed units of equity-oriented mutual fund.

Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline.Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline.

Last year my financial advisor had made several changes to my portfolio. He had replaced under performing mutual funds with better funds. These resulted in lot of tax liability both short term and long term. Recently I bought a property worth Rs 12 lakh by taking a loan against my mutual funds.  Is it possible to get any relief from tax due to this investment?
Vijayalakshmi
Under the Income Tax Act, Section 54F stipulates exemption of capital gains arising on transfer of a long-term capital asset other than a residential house property (mutual funds in your case) if gains are invested in a “new residential house property” within the prescribed timeline. Conservatively, investment in a property of an ashram cannot be construed as investment in a residential property. Accordingly, the investment made by you shall not qualify for exemption under Section 54F. Further, no deduction under Sections 80C to 80U is allowed from long-term capital gains. Hence, long-term capital gains are taxable at 20% (plus applicable surcharge and cess) or 10% for gains in excess of Rs 1 lakh on transfer of listed units of equity-oriented mutual fund.
Likewise, short-term capital gains referred to in Section 111A, i.e., on sale of listed units of equity-oriented mutual fund will be taxed at 15%. Any other short term capital gains will be taxable at applicable slab rates. No deduction under Sections 80C to 80U is allowed on short-term capital gains referred to in Section 111A either. However, you may claim deductions from STCG other than those covered under Section 111A. In addition, tax liability of this year shall be discharged this year itself, as there are no provisions for set-off of current year’s tax liability with that of next year’s.

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