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India Today
16 hours ago
- Business
- India Today
Selling your house? Here's how you can save lakhs in taxes
If you are planning to sell a residential property, you might be worried about the tax you will have to pay on the profit earned. But there's a legal way to save a large part of this tax if you reinvest the money in the right per tax expert CA (Dr.) Suresh Surana, provisions under Section 54 and Section 54F of the Income Tax Act can help individuals and Hindu Undivided Families (HUFs) reduce or even avoid paying long-term capital gains tax, provided certain conditions are a simple breakdown of how these exemptions BENEFITS UNDER SECTION 54 Section 54 of the Income Tax Act allows exemption on long-term capital gains earned from the sale of a residential house or plot of land if the profit is reinvested in buying or constructing a new residential property in taxpayer must invest in the new property within 1 year before or 2 years after the sale of the old property. If the new house is being constructed instead of purchased, it must be completed within 3 years of the date of sale.'This exemption can only be claimed for one residential property. However, if the capital gain is up to Rs 2 crore, the taxpayer has a one-time option to invest in two residential properties,' said Dr. there's a lock-in period: the new house must not be sold within 3 years. If the new property is sold before this period ends, the tax exemption will be cancelled and the earlier benefit will be added to your income for that exemption amount under Section 54 will be the lower of:The capital gains from the sale, orThe amount actually invested in the new house (including any amount deposited in the Capital Gains Deposit Account Scheme)From April 2023, there is a limit on how much of the new property cost can be considered for exemption. 'The investment in the new house will be capped at Rs 10 crore for claiming tax relief under Section 54,' added Dr. BENEFITS UNDER SECTION 54FIf you are selling a long-term capital asset other than a residential house, such as shares, land, or commercial property, you can still claim a tax break by investing the net sale amount into a residential house. This benefit comes under Section 54F of the Income Tax Surana explained, 'To get this exemption, the individual must not own more than one residential house at the time of the original sale, and should not buy or construct any other house within 2 to 3 years.'advertisementLike in Section 54, the new house should be bought within 1 year before or 2 years after the sale, or constructed within 3 the newly bought house should not be sold within 3 years, or else the earlier tax exemption will be exemption is calculated proportionately using this formula:Capital Gains (Amount Invested in New Property Net Sale Consideration)If the entire net sale amount is invested in a new house, then full exemption can be claimed. If only a part is invested, the exemption will be this section also comes with a cap. 'If the cost of the new property exceeds Rs 10 crore, the amount above Rs 10 crore will not be considered for the exemption calculation,' said Dr. TO REMEMBERYou must complete the investment within the timelines given, either before or after the property all records and proofs of payment, agreements, and registrations to claim the exemption during tax you are unable to invest before the tax filing due date, you can deposit the amount in a Capital Gains Account under a government-run scheme to keep the tax benefit Surana added that while both sections help taxpayers save on capital gains tax, it is important to evaluate your eligibility and make sure all conditions are followed. 'Planning the reinvestment carefully and keeping within the limits will help save lakhs in taxes legally,' he many home sellers, using Sections 54 and 54F can make a big difference in how much tax they pay. But the benefits are only available if the rules are followed properly. If you're unsure, it's always best to take the help of a tax professional.(This article is for general informational purposes only and does not constitute financial advice. Readers are encouraged to consult a certified financial advisor before making any investment or financial decisions. The views expressed are independent and do not reflect the official position of the India Today Group.)- Ends
Time of India
2 days ago
- Business
- Time of India
What is clubbing provision in Income Tax Act? When is it applicable?
What is clubbing of income? Clubbing provisions When is clubbing not applicable? If money or assets are transferred to wife or daughterin-law before marriage. If any gifts are received at the time of marriage. The income from these are also not clubbed for the transferor. If one stays with parents and gives them rent, or offers a monetary gift, or if they invest this amount, it will not invite clubbing provisions. If money is invested in the PPF for spouse or child. If money is saved by wife from the household expense funds given by the husband. As the term suggests, clubbing means combining the income of another person with one's own for tax calculation purposes. However, many people club the incomes of their family members and close relatives in order to evade tax or minimise their tax liabilities. To prevent tax evasion and encourage compliance, the government has laid down rules for clubbing of incomes under Sections 60-64 of the Income Tax Act , rules, or clubbing provisions, specify the types of incomes, relationships and circumstances under which incomes can be clubbed for tax benefits. So, not all relationships or money transfers qualify for clubbing provisions. Spouses, children, daughters-inlaw, Hindu Undivided Families, and specific close relatives typically invite these provisions. For instance, if a parent invests in a fixed deposit (FD) in his child's name, clubbing provisions apply and the interest generated from this FD is clubbed with the income of the parent who earns more. However, the parent can avail of `1,500 per child tax deduction under the old tax regime . Besides, clubbing provisions won't apply if a minor child earns an income through manual work, or by using his own skill and talent, or if he suffers from a incomes that are considered for clubbing can be from various sources and investment avenues like property, interest, mutual funds and bank deposits, among others. Since the taxable income increases after clubbing, it also impacts the ITR form that is chosen to file tax provisions among relatives and family members don't apply under these specific conditions.
The Hindu
2 days ago
- Business
- The Hindu
Ask us on Investments
Q I am a retired bank officer aged 70. I have a health insurance policy with a coverage of ₹4 lakh under a special scheme of IBA (Indian Bankers Association). The maximum coverage for family is ₹4 lakh under the scheme. Top-up to a maximum of ₹5 lakh is available. I want to have a coverage of minimum ₹20 lakh for me and my wife. Kindly advise. M. Gopinathan A The policy, which you have currently, might be a group health insurance policy designed for retired bank staff. The policy might not be customisable or might be subject to negotiations between IBA and unions. Against this backdrop, it is advisable to take a separate individual health policy, in addition to your bank policy, with a basic coverage (Sum Insured) of ₹5 lakh. If you cannot afford this additional individual base policy, you can go with your bank policy itself. But, having a individual health policy has more benefits. For a coverage of up to ₹20 lakh, you can buy a super-top up health insurance policy, with a deductible of ₹5 lakh, if you purchase an individual base policy for this amount. If you prefer to use only the bank policy, then your deductible amount for the super top-up policy must be ₹4 lakh only. There are two top-up policies available in the market viz. top-up and super top-up. Both are completely different. For a complete understanding about the difference between the two policies, you can refer to the Moneywise article titled 'Top-up vs. super top-up' dated March 17, 2025. The premium cost for the super-top up health insurance policy is costly when compared with the top-up policy. Still, for your age, it is advisable to buy the super top-up policy to avail maximum benefits. Most health insurance companies offer both the policies, but you need to be careful to check whether you are really buying the super top-up policy. You can also buy an individual health insurance base policy with the Sum Insured of ₹20 lakh but that is highly expensive, and we would not suggest it. Q I am 73 years old. I want to sell my 4-cent land purchased in 2007. What will be my tax liability under the Income Tax Act. Sivanandan A In the Union Budget 2024-2025, presented on July 23, 2024, Union Finance Minister Nirmala Sitharaman said long-term capital gains on all financial- and non-financial assets will attract a tax rate of 12.5%. However, in her Budget speech, she did not explicitly mention that the reduced 12.5% (from the earlier 20%) tax rate on LTCGs is without the indexation benefit. Later, on August 7, 2024, the Finance Bill 2024 was passed in the Lok Sabha with an amendment that gave a relaxation to the new capital gains tax on real estate. The amendment was introduced after widespread criticism from various corners, including Opposition parties and tax professionals. As per the amendment, individuals or Hindu Undivided Families (HUFs) who purchased houses or other immovable property before July 23, 2024, have two options regarding the treatment of long-term capital gains and they can choose any one option that is suitable for them. First option is they can choose to pay straight 12.5% tax on the capital gains without claiming the indexation benefit. Or the second option is that they can choose to pay 20% tax on capital gains, after claiming the indexation benefit. Further, according to the Income Tax Act and as per the Union Budget 2024-25, if you have owned an immovable property (land) for more than two years (24 months), then it is considered a long-term asset. In your case, you have purchased the land in 2007 and therefore, if you earn capital gains by selling the land, it will be considered Long Term Capital Gain (LTCG). Since you have purchased before the July 23, 2024 window, you can choose any one of the tax rates – 12.5% on capital gains without indexation or 20% on capital gains with indexation benefit. The choice is yours. (The writer is an NISM & CRISIL-certified wealth manager)
News18
3 days ago
- Business
- News18
ITR-2 Filing: A Step-By-Step Guide To File Income Tax Return On Your Own
The Income Tax Department has extended the ITR filing deadline for FY 2024-25 to September 15, 2025, for individuals and HUFs who don't need their accounts to be audited. For the financial year 2024-25 (Assessment Year 2025-26), the income tax return (ITR) filing process is underway. The Income Tax Department has released the Excel utilities for various ITR Forms to facilitate hassle-free filing. It's important for all taxpayers to choose the right form as per their category and income. Form ITR-2 needs to be used by individuals and Hindu Undivided Families (HUFs) who do not have any income from business or profession. Taxpayers receiving income from sources like salary, pension and capital gains from the sale of assets need to use ITR-2. Who is eligible to file ITR-2? Individuals having income from the following sources are eligible to file Form ITR-2: – Income from salary or pension – Income via house property (it might come from multiple house properties) – Receipts from capital gains – From other sources (including lottery winnings, or other legal means of online betting) – Agricultural earnings of more than Rs 5,000 · Stocks, bonds and Mutual Fund capital gain statements from brokers or banks. · Purchase/Sale document of any property. Step 2: Download ITR-2 Form Navigate to the Income Tax Department's e-filing website to get the form or use their online e-file portal. Step 3: Begin with filing your personal information like Name, PAN, Aadhaar Card Number, Address and Email ID. Step 4: Report income from a salary or pension: Use Form 16 to accurately report your income from a salary. Step 5: Declare income from house property in the dedicated section. Step 6: Provide data about the capital gains, if any, as per the statements collected from banks and brokerage firms. Step 7: Share details of foreign assets (if applicable): List all foreign assets and their associated income. Step 8: Deductions and exemptions: Claim deductions under Sections 80C, 80D, and other sections of the Income Tax Act, 1961, as applicable. Step 9: Review tax liability: After applying the deductions and exemptions, calculate the total tax liability. Step 10: Submit and Verify: After final completion, review all the information once again and click on submit. The ITR can then be e-verified with Aadhaar OTP, Bank account and digital signature. ITR Filing Date for FY 24-2025: The Income Tax Department has extended the ITR filing deadline for FY 2024-25 to September 15 for individuals and HUFs who don't need their accounts to be audited. First Published: Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
News18
6 days ago
- Business
- News18
ITR Filing 2025: Not One Deadline For All; Check Last Dates For Salaried, Businesses, More
Last Updated: ITR Filing Deadline 2025: The income tax department extended the ITR filing deadline for FY2024-25 to September 15, 2025, for individuals and HUFs. ITR Filing 2025 Last Date: The income tax department has extended the deadline for the ITR filing for FY2024-25 (Assessment Year 2025-26) for 45 days to September 15, 2025, from July 30, 2025. This new due date applies to individuals, Hindu Undivided Families (HUFs) and other taxpayers whose accounts don't require auditing. The CBDT ascribed the extension to the extensive changes implemented in the notified ITRs, citing the time needed for system readiness and the rollout of Income Tax Return (ITR) utilities for Assessment Year (AY) 2025–26. 'Accordingly, to facilitate a smooth and convenient filing experience for taxpayers, it has been decided that the due date for filing of ITRs, originally due on 31st July 2025, is extended to 15th September 2025," CBDT said in the press release. Income tax return form of ITR-2 has been enabled to file through Online mode with pre-filled data at the portal a week ago. September 15 Deadline For Those Who Don't Require Audit The tax department has extended the deadline for those taxpayers who don't require audit to file the taxes. The changes in income tax forms, new slabs under new income tax and capital gain taxes have prompted the department to extend the dates. Who Can File ITR By October 31, 2025? Taxpayers whose accounts need to be audited—such as companies, proprietorships, and working partners in firms—have until October 31, 2025, to file their income tax returns (ITR) for the financial year 2024-25 (assessment year 2025-26). Before they can do that, they must ensure their audit report is submitted by September 30, 2025. As of now, the Income Tax Department has not announced any extension to this deadline. ITR Filing Deadline for Those with International Dealings If a taxpayer is involved in international transactions or certain specified domestic transactions, they are required to submit a report under Section 92E. In this case, the due date for filing ITR is November 30, 2025. To stick to this timeline, their audit report must be submitted by October 31, 2025. Just like in other categories, the government has not given any update about extending this due date. Missed the Due Date? Here's the Belated ITR Deadline If you miss the original ITR deadline, you can still file a belated return. For all taxpayers, the belated ITR for FY 2024-25 can be submitted until December 31, 2025. However, keep in mind that filing late might attract a penalty or reduce some tax benefits. What Happens If You Miss The Deadline? Taxpayers then need to pay interest at a rate of 1 per cent per month or part month on the unpaid tax amount. Late Filing Penalty Rs 1,000: If total income is below Rs 5 lakh. Rs 5,000: If total income is above Rs 5 lakh and return is filed after the due date but before 31st December. Losses under capital gains or business/profession can't be carried forward to future years if you file late. First Published: July 24, 2025, 07:10 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
