Efficient tax planning and awareness can help an Individual on saving taxes on income earned on Capital Gains. On the other hand, improper planning and impulsive decisions can lead to huge incidence of taxes. The following factors should be kept in mind, while planning your taxes on Capital:
ï‚§ Long term capital gains is charged at lower rate of tax, thus individuals should so plan as to transfer their capital assets normally only 36 months or 12 months (in case of shares) from date of acquisition;
ï‚§ If a property is transferred by an individual to his minor son without adequate consideration, it should be sold only after the son attains majority in order to avoid clubbing of income;
ï‚§ Individual assessee should take advantages of the in-built exemptions provided, by investing the capital gain arising from the sale of residential house property in the purchase of another house (even out of India). Further, to avail advantage of exemption u/s 54B, 54D, and 54EC, it should be ensured that the investment in the new asset is made only after effecting transfer of capital assets.
ï‚§ To avail the benefits of in-built provisions under Capital Gains (Section 54, 54B, 54D, 54EC, 54F, 54G and 54GA), individuals should not transfer newly acquired assets within three years from the date of acquisition.
ï‚§ Further, in case of sale of shares listed on stock exchanges on which securities transaction tax is applicable, long term capital gain (Kept for 12 months or, more) is exempt from tax.
Further, some assets if acquired in some specified mode do not regarded as â€œtransferâ€ for this purpose. Consequently, newly acquired assets may be transferred even within three years of their acquisition according to the specified modes without attracting capital gains tax liability.
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Taxmantra has the expertise in handling individual taxation. Taxmantra also provides comprehensive tax planning and Tax support in addition to filing of return of income.