Finance Buddy

Sujit Bangar, Founder of TaxBuddy.com, has highlighted some costly mistakes that many people make when selling their homes—errors that can lead to significantly higher tax payments. In a recent LinkedIn post, Bangar shared the case of a client who nearly paid Rs 1.87 lakh extra in taxes due to overlooked deductions. “One of our clients (Ram) was about to pay Rs 1,87,500 extra in taxes while selling his house. We added all legally allowed costs and successfully reduced his tax burden,” Bangar wrote. He emphasized that when calculating capital gains , taxpayers often underestimate what qualifies as part of the cost of acquisition or improvement. Many limit it to just the purchase price, missing out on legitimate deductions allowed under Section 55 of the Income Tax Act. What costs can you legally claim while selling property? According to Bangar, the following expenses can be added to your cost of acquisition—provided you have proper documentation: Stamp duty and registration fees Broke...

A recent income tax tribunal ruling has clarified that owning two jointly held flats does not automatically disqualify a taxpayer from claiming Section 54F exemption, cutting a potential tax bill by ₹12.7 lakh. In a case concerning the 2013–14 assessment year, a taxpayer sold property for ₹64 lakh, generating a long-term capital gain (LTCG) of ₹61,65,546 after deducting the acquisition cost.  The entire gain was invested in a new residential property, and a full exemption under Section 54F of the Income-tax Act was claimed. The Income Tax Department rejected the claim, citing the “two-house condition” under Section 54F, which bars the exemption if the taxpayer owns more than one other residential property on the date of transfer.  According to the department, the taxpayer’s joint ownership of two other flats meant disqualification, resulting in a calculated tax demand of ₹12,80,123, including cess. The matter went before the Income Tax Appellate Tribunal, which held that S...