Is The Money Received On The Sale Of The House Taxable?

The capital gains computed after taking into account the indexed cost shall become taxable. The rectification application can only be made if the mistake is apparent from the records which in my opinion are not your case. Gifts from parents/children are not treated as income.

Balwant Jain

Updated on: 13 January 2024 9:39 am

House, taxable, capital gains, Money, Income

I have an old house. After the sale, I want to deposit the money in my savings account. I will rent a house and plan to buy a new house. Is the money received on the sale of the house taxable? How can I save the taxes?

Since you are planning to sell your old house, I presume the same must have been held for more than two years and thus the profits will be treated as long-term capital gains. The capital gains computed after taking into account the indexed cost shall become taxable at 20%.

However, since you want to acquire a new house, you need to buy a ready-to-move-in house within two years from the date of sale of this house or get a new house constructed within three years from the date of sale of the house to claim exemption from payment of taxes on such long term capital gains.

Please note that if the taxable long-term capital gains are not utilized for acquiring a new house by the due date of filing of ITR which is generally 31st July of the subsequent year, the amount which remains unutilized has to be deposited in an account with banks under capital gains scheme. You can use the money so deposited in the account to pay for the acquisition of the new house. So you can keep the money in your savings bank account till 31st July

During the assessment year 2021-22, I had received some amount for leave encashment after resignation but I did not know that it was exempt so I paid tax on that amount. Now few days back I came to know that such leave encashment on resignation is exempt from income tax. How can I claim a refund of that now?

Though you can make an application for rectification of mistake under Section 154 within four years from the end of the year in which the assessment order was passed for pointing out any mistake which is apparent from records, however, I feel that you can not avail this facility as the breakup of the amount of leave encashment and the same being exempt would not be apparent from ITR filed by you. The rectification application can only be made if the mistake is apparent from the records which in my opinion are not your case.

I am a government employee. I have received Rs. 8 lakhs from my father's savings account in my salary savings account at the bank for cancer treatment of my father. That money is being used up for his treatment. Do I have to show this money as my income in my return or I can omit it? If I have to show this, then how I can nullify the transaction? Because no money rest with me.

Rs. 8 lakhs received from your father is not your income and can be treated as a loan from your father and the expenses incurred by you for his treatment can be treated as repayment of the same. Alternatively, you can treat this money as a gift received and the expenses incurred by you can be treated as your expenses or gift given. By following both ways, you will be able to nullify the transaction. Gifts from parents/children are not treated as income.

The author is a tax and investment expert

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