[ecis2016.org] The sum and thus be listed at the time of capital gains tax payment by the flat seller, specified the ITAT.
A recent ruling by the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) paves the way for property sellers, who have previously spent cash on home improvement, to compute that amount at the time of capital gains tax liability.
You are reading: Cash used for flat improvement can be included in property cost: Mumbai Income Tax Appellate Tribunal
Under India’s income tax laws, sellers of the property are liable to pay capital gains tax on the profit they earn on the transactions. This profit is calculated after deducting the cost of acquisition (includes purchase cost, stamp duty & registration fee and brokerage charge) and improvement of the property from the transaction cost while also factoring in indexation benefits.
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Giving its order on a case pertaining to one Komal Gurumukh Sangtani, the Mumbai ITAT Bench allowed cash money paid for flat improvement as part of the overall property cost. NRIs Sangtani sold two residential flats owned by her husband Gurumukh Sanghani, and approached the ITAT after the assessing officer refused the deduction for the cost of improvement of the property when computing capital tax liability.
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In such cases, the ITAT indicated, the taxpayer will have to prove no unaccounted money was used to make the payment, and explain the source of the cash payments made for the improvement works.
The Mumbai Bench of ITAT also said that cost of improvement and personal effects were not the same things, and that only the former can be added when computing the overall property cost. While changes like application of tiles, etc. that enhance and strengthen the property, will qualify as an improvement cost, objects in the house like refrigerator, air conditioner, LED TVs, furniture, etc., would qualify as personal effects and won’t be eligible for tax deduction.
Source: https://ecis2016.org/.
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Category: Lifestyle
