Tax query: How capital gains tax is shown in Form 26AS

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Some time back, I read the government would facilitate capturing capital gain tax details from mutual funds (both short and long term) in 26AS. However, I am not able to find this in my 26 AS. Can you clarify, please?

T. Mani

Effective 1 June 2020, as per Rule 114-I of the Income Tax Rules 1962, the new form 26AS (Annual Information Statement) shall provide detailed information related to assessee’s specified financial transactions entered in the financial year (FY).

Such Annual Information Statement shall contain comprehensive information relating to:

· Taxes deducted or collected at source (TDS/TCS),

· Specified financial transactions (purchase of shares, immoveable property, purchase/sale of goods, property and services, purchase of shares/bonds/debentures/units of mutual funds, etc. subject to specified threshold limits),

· Payment of taxes,

· Pending/completed proceedings etc.

In view of the above, in case any taxes are deducted at source from the capital gains transactions, or purchase of mutual funds are more than the specified limit (aggregate of INR 10 lakhs in a FY) it shall reflect in the new Form 26 AS once it is updated in the tax portal.

I purchased a plot in the year 1984 for a sum of ₹2,100. Now, I want to sell the same which may fetch a sum of ₹30 lakh . Please advise on capital gains tax liability.

Kandasamy Paramasivan

As per Income-Tax Act,1961 (the Act), gain arising from the sale of a capital asset is taxable under the head “capital gains”. Further, the gains will have to be sub-classified into long term or short term depending on the period of holding of the asset. This, in turn, would also determine the rate of taxation of the gain, deductions that can be claimed and associated conditions.

As the plot purchased by you was held for more than two years, it qualifies to be a long- term capital asset (LTCA). The resultant gains on sale of LTCA will qualify as long-term capital gains (LTCG) and taxable at the rate of 20 per cent as per section 112 of the Act, with applicable surcharge and cess.

Section 48 of the Act provides for mode of computation of capital gains. Any expenditure incurred wholly and exclusively in connection with the transfer of an asset or acquiring the asset and for making any improvement to the asset shall be deducted to arrive at the taxable capital gains. The cost of acquisition of the plot of land shall be higher of the actual cost of such asset to you (i.e., ₹2,100) or fair market value as on April 1, 2001 and such cost of acquisition can be increased with reference to the cost indexation index (CII) corresponding to the year of sale and as on April 1, 2001. Further, with effect from April 1, 2020, such fair market value should not exceed the stamp duty value of the immovable property as on April 1, 2001.

Under specified sections viz. section 54EC, section 54, etc., deduction/exemption under the Act could be claimed by way of either investing LTCG in the prescribed bonds or investing LTCG/net consideration in buying a residential property in India, subject to conditions and as per the specified timeline prescribed under the Act.

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in



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