I am 69 years old. I had bought a house property and sold it within two years. Should the capital gains be the difference between the sale price and the cost price of the house property? Can the registration and stamp duty be included in the cost price? What would be the tax rate for the capital gains arising out of the transaction?
Bani Debi, Santoshpur
When you buy and sell a house property, you should be very careful about the capital gains tax implications. If a house is bought and sold within three years, the capital gains will be considered as short-term capital gains. The implication of short-term capital gains is that it is considered as your normal income for the year in which the property is sold. The entire gains will be added to your annual income for that year and will be taxed accordingly. However, you can include the registration fees and stamp duty as part of the cost of acquisition of the property.
Is there a ceiling for donation to institutions/social organisations covered by the Income Tax Act? Is it obligatory to claim deduction under Section 80G(5)(vi) for the amount of donation by individuals? What income tax return form is required for submission relevant to assessment year 2012-13?
Lalit Mohan Chowdhury, Howrah
Donations to charities covered under Section 80G of the Income Tax Act are tax deductible expenses. However, the extent of deduction that you can claim are capped at 50 per cent and 100 per cent, respectively, depending on the charitable institution you donate money to.
In case of certain funds or institutions, donations above 10 per cent of your Adjusted Gross Total Income (GTI) are allowed for deduction only up to 10 per cent of your adjusted GTI. Thus, even if you make a donation larger than 10 per cent of your adjusted GTI, the donation eligible for deduction would be capped at 10 per cent.
Please note that this "10 per cent of adjusted GTI" limit is applicable for the sum of all donations made by you, and not on each individual donation separately. For the income tax return form, it will depend on your sources of income. If you have income only from salary or pension, you can use ITR 1 or Sahaj form.
If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: email@example.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.