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It is better to conquer yourself than to win a thousand battles, Then the victory is yours. It cannot be taken from you.
Capital Gains Indexation;
- Indexation Restoration Alert – Part II Working of Capital Gain Exemptions in New Scenario Indexation Benefit provided to only Resident Ind./HUF for Land/Building acquired before 23/07/2024 only for Tax Calculation Purpose, which means:-
i) Capital Gain to be mandatorily calculated as per new provision only i.e. without indexation which implies that for exemption u/s 54/54EC & 54F higher amount needs to be invested
Example!!
Sale of Land on 1st Aug 24 – 4 Cr
Purchase in 2001 – 1 Cr
Indexed Cost – 3.48 Cr
Capital Gain – 3Cr
Tax Calculation
New Prov. – 3Cr @ 12.5% – 37.50 Lacs
Old Prov. – 52 Lacs[4Cr-3.48Cr]@ 20%-10.40 lacs
- As per Amendment in Finance Bills tax in excess of old provisions shall be ignored hence Tax Payable shall be 10.40 Lacs BUT FOR AVAILING EXEMPTION OF ENTIRE CG U/S 54 , AMOUNT OF CG i.e. 3Cr needs to be Re-invested (and not just 52 Lacs)
If only 1 Cr is invested :-
Then 2 Cr (i.e. CG – Investment) shall be taxable as Capital Gain.
Now tax on 2Cr @ 12.5% – 25 Lacs
But shall be restricted to 10.40 Lacs (Old Provision)
Here we can see that Investment of 1Cr is not providing any Tax benefit via Sec 54
If 2Cr is invested, then also no benefit!!
If 2.5 Cr is invested:-
Then 50 Lacs shall be taxable as CG
Tax – 50Lacs@12.5% = 6.25 Lacs
Exemption u/s 54EC will also work in same manner
Now Exemption u/s 54F:-
If net consideration of 4 Cr is invested, then entire capital gain Exempt
If 2 Cr is Invested out of Net Consideration 4 Cr:-
Exempt Capital Gain = 3Cr *2Cr/4Cr = 1.5 Cr
Taxable CG = 1.5 Cr
Tax on 1.5 Cr = 1.5 Cr @ 12.5% = 18.75 Lacs
But the same shall be restricted to 10.40 Lacs (old Prov.)
Hence we can see No Tax benefit even on investing 2 Cr.
- Companies having presence in multiple states and distributing common input tax credit with branch offices will have to register as Input Service Distributor (ISD) with GST authorities by April 1, 2025. Through the Finance Bill, 2024, in February.
- The Reserve Bank of India’s Monetary Policy Committee (MPC) has left the key lending rate (repo rate) unchanged at 6.5%. This is the ninth straight instance of the policy repo rate being left unchanged by India’s central bank.
