I am 87 years and would like to dispose of my residential house to meet my personal needs. I had purchased a land in 1970 and constructed a house there over a long period of time at a total cost of Rs. 50,000. The present market value of the property is around Rs. 1 crore. The stamp duty value of the property as on April 1, 2001 was Rs. 25 Lakh. Can I claim total tax exemption as a super senior citizen? If not, is there any way I can reduce or avoid paying any capital gain tax on the sale?

There is no specific exemption from payment of taxes on capital gains for any person based on his/her age. Since the house was constructed more than two years ago, the profits will be treated as long-term capital gains (LTCG).

Moreover, as the property was acquired prior to July 23, 2024, you have the option either to pay tax at a flat rate of 20 per cent on LTCG computed after indexation, or at 12.50 per cent on LTCG without indexation, i.e., sale price realised as reduced by stamp duty value as on April 1, 2001.

You can claim exemption from payment of tax on such LTCG either by investing the unindexed capital gains i.e., the difference between net sale price and stamp duty value as on April 1, 2001 either in another residential house or in capital gains bonds of specified financial institutions within the prescribed time periods.

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My mother passed away recently. We found some gold jewellery in her locker. She was not a taxpayer. If I sell the jewellery now and deposit the money in my account, will I have to pay tax on the sale?

This will depend on various factors, such as the total value of the gold jewellery which was lying in your mother’s locker, whether she had any earning, and whether your father was a taxpayer.

You will not face any problem if the value of gold jewellery found in her locker is deemed reasonable. What is reasonable will, however, depend on these above factors. So if the jewellery was genuinely found in her locker and it can be reasonably proved that she might have accumulated and/or acquired so much of gold during her lifetime, then you should not face any problem.

However, in case you are not able to convince the tax officials about the reasonableness of the quantity of jewellery found in her locker, you may have to pay tax at 60 per cent on the value of the jewellery sold, along with additional interest and penalty.

During the current year, I have incurred a short-term loss on shares. I also sold a flat and made LTCG on the sale. Can I adjust the short-term loss incurred on sale of shares against the LTCG made on the sale of the flat?

According to the provisions of the Income-tax Act, 1961, one can set off the loss incurred by him/her from one source against income earned from another source under the same head as well as against income taxable under other heads, subject to certain prescribed conditions.

Short-term capital loss (STCL) incurred can be adjusted against any capital gain (short-term or long-term) arising during the same year.

So, you can set off the STCL on shares against the LTCG earned on sale of the flat during the same year.

Do note that had the situation been exact opposite i.e., if you had long-term loss and short-term gains, you would not have been able to do such set-off, as the law does not allow such set-off as long-term capital loss can only be adjusted against LTCG.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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