Recently, the Income Tax Appellate Tribunal, Delhi, said that if a taxpayer sells multiple properties to invest in a house, he can get the long-term capital gains tax benefit on all the house he sells. But what happens if an individual sells one house and invest in multiple properties?
The law states that to take the benefit of the long-term capital gains tax, the proceeds of the sale of a property has to be invested in a single house. But in certain cases, the income tax department can dispute what the taxpayer considers as one residential unit. The tax department, for example, can dispute if a taxpayer sells one house and construct a building or a bungalow on a plot with two or three floors that are occupied by family members.
For the taxpayer, it is one residential unit. An assessing officer, however, can take the view that different floors can mean that each floor is an independent house. In such disputable cases, the taxpayer needs to be cautious, warns tax experts. “In such cases, the tax department will delve into details to confirm whether it should be considered as a single or separate unit,” says Kuldip Kumar, partner and leader, Personal Tax, PwC India.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard