Tax Book 2023

Capital Gains Chapter- 12

Example C Following information is related to Mr. K. (All amounts are in rupees)

Capital asset

Purchase

price

Consideration

received on

disposal

FMV at the

time of sale

Holding

period

Shares of private company 50,000 40,000 60,000 6 months

House 1 1,000,000 1,500,000 1,500,000 1.5 years

House 2 1,500,000 2,000,000 2,000,000 5 years

Assuming he has no other taxable income, compute tax payable by Mr. K. for tax year 20 23.

Solution:

Mr. K

Computation of taxable income and tax liability: Rs.

Shares of private company:

Consideration on disposal (higher of FMV or actual amount) 60,000

Purchase price (50,000)

10,000

House 1:

Consideration on disposal (higher of FMV or actual amount) 1,500,000

Purchase price (1,000,000)

500,000

House 2:

(Holding period is more than 4 years, hence nothing is taxable in

case of house 2) ______-_____

Income taxable under NTR 510,000

Less: chargeable to tax under SBI 500,000

10,000

Tax liability (Income is below taxable limit), hence tax liability is zero -

Tax liability under SBI (500,000 x 10 %) 50,0 00

Total tax liability 50,0 00

Explanation of section 37 and 38