Property:Q & A

Property Sale
I sold an old ancestral property in March this year. Where should I invest the sale proceeds to save the capital gains tax? How much capital gains tax do I have to pay if I don’t reinvest the money?


You can save your capital gains tax by investing in specified bonds of Rural Electrification Corporation or National Highway Authority of India. However, you cannot invest more than Rs 50 lakh in a financial year in these capital gains tax exemption bonds. Check out the websites of these two institutions for availability of these bonds. Your capital gains will be the difference between the sale price and total cost of acquisition, improvement and other expenditures such as stamp duty, registration of the property. You can pay capital gains tax at the rate of a flat 10 per cent or at 20 per cent with indexation benefit. The central government notifies the cost inflation index for each financial year.


New investor
I am a new investor in equity mutual funds. I invest through systematic investment plans. What should be the ideal period of investment — three or five years? What will be the tax liability on the withdrawn money?



Unlike bank fixed deposits, there is no fixed time limit for investment in equity. What you should have in mind while investing in equity is a reasonable return, say 20 per cent, which suits your financial goals. You can sell the investment when you get the targeted return and reinvest the proceeds in another fund depending on the market situation. The tax liability will depend on how soon you sell the units after purchasing them. If you sell them within 12 months from their purchase, you will have to pay a tax on the gain amount at the rate of 15 per cent beginning the current financial year. But if you sell the units after 12 months of purchasing them, you don't have to pay any tax.



Inheritance laws
I am an NRI. I inherited money and a share in my late father’s estate in India. I want professional help regarding the RBI rules on inheritance repatriation and steps to be taken. Can a chartered accountant help me?



Practising tax planners or certified financial advisers, including chartered accountants and income tax lawyers, will be able to help you.