I had purchased a property in India in 2009. But the physical possession was taken in July 2012. Now I am looking to
sell the property. My question is which year, 2009 or 2012,
would be considered as the year of purchase for calculation of
capital gain? If it is 2009, the gain would be long-term in
nature, however if it is 2012, I would end up paying heavy
taxes since the gain would be short-term.
— Preeti Shah
Ownership of the property is to be taken from the date of
possession of the property. So in our opinion, for the purposes of long-term capital gain, the property has to be held for a
period of three years from July 2012.
My daughter lives in Ontario, Canada. Recently she mar-
ried her long time partner.
We had a traditional Indian wed-
ding on a small scale and she got
some jewelry as gifts from relatives
She doesn’t want to keep most of
that jewelry. She would rather sell it
and use the money for other things.
My question is whether the sale
will attract any income tax or will it
— Hardev Kaur
Jewelry is normally taxable —
both at the time of receiving it as a
gift and even at the time of selling
it. However, since your daughter
has received the jewelry on the
occasion of marriage, the same will
not be taxable. But note the tax
exemption is only available on the
first stage — of having received it as gift. Upon sale, capital
gains tax will indeed be payable.
I live in Dubai with my wife. I have certain investments in
shares and property in India that my father-in-law looks after.
Recently, both he and I sold some shares and earned some
short term capital gains.
We calculated the sale in such a way that the profit does not
exceed Rs 250,000 ($4,070) which is the basic exemption
limit below which tax is not payable.
However, my accountant in India insists that this exemp-
tion limit is not available for capital gains and that I will have
to file my tax return. My father-in-law, on the other hand, has
been adopting this strategy since long and in turn insists that
tax is only payable for income that is over and above the
exemption limit. Who is right? Could you advise on the mat-
— Vishnu Pathak
Both are right in their own way.
What your father-in-law is maintaining is that if there is
any gap in the basic exemption limit the same can be occupied by the capital gains, long-term (taxable only) or short-term. Only the excess will be charged to tax at the applicable
rates. For example, let’s say his income from bank interest is
Rs 50,000 ($814). His short-term capital gains is Rs
300,000 ($4,884). So the gap of Rs 200,000 (3,256) left
after adjusting interest income of Rs 50,000 ($884) can be
taken up by the capital gain income and only the balance Rs
100,000 ($1,628) will be taxable.
However, this is true only for residents. NRIs do not enjoy this facility. For NRIs, even a single rupee of
capital gain (except long-term from
equity which is specifically tax-free)
My son had taken a housing loan
in July 2011. Subsequently he
moved to the US. Gradually, the
interest rate on the loan is inching
upwards. He also finds it cumbersome to keep sending money for
Therefore, he would rather close
off the loan by prepaying the entire
However, he has been told by the
bank that if he closes the housing loan account before five
years, he will lose the tax benefit already claimed by him in the
previous years. He does not mind closing the account immediately, if it does not affect his income tax for previous years
when he was in India. Please advise.
— Vasantha B
The restriction is not on closing the housing loan but on
selling the property. If the owner transfers the property
before the completion of five years from the end of the financial year in which the possession of such property has been
obtained, the earlier tax deductions claimed are to be added
back as income earned in the year of transfer.
In any case, note that the cancellation of the earlier deduc-
tions only comes into the picture upon transfer/sale of prop-
erty within five years and not on retirement of loan. Your son
is free to retire the loan anytime he desires to.
A relative of mine in India has three children, two sons and
one daughter. All the children live in Australia. He wants to
write a will only in favor of his daughter who looks after him.
Please advise if it is legally possible to bequeath only to the
daughter and how can he ensure that the will not be contested by his sons upon his death.
— P C Bajaj
The best course of action would be to bequeath some assets
(at least those that he can) to his daughter during his life
time instead of only upon death.
Legally speaking, as long as the estate of your friend is self-acquired and not inherited, he has a right to bequeath his
assets to anyone as per his wish. It would be advisable to get
the will registered to prevent any contest later on.
A N SHANBHAG SANDEEP SHANBHAG
The rules you should know about selling jewelry
Readers who wish to ask A N Shanbhag a question can fill in the following details and mail the coupon to: The Business Editor, India Abroad, 42 Broadway, 18th Floor, New York, NY 10004 Or fax it to 212-727 9730
A N Shanbhag is an investment consultant and author of In the Wonderland of Investment; How to Convert a Taxpayer into a Taxsaver; NRI Investment Guide. This article does not constitute tax or legal advice. Consult your tax or legal advisor before making any tax- or legally-related investment decisions. The authors may be contacted at email@example.com
At a two-day India Investment Forum conference in New York last week, about 200 entrepreneurs and
investors were told by experts that
Narendra Modi has the capability to take
India back to high growth path, to spur
development and curb inflation and
‘Business and consumer confidence are
slowly but surely coming back, thanks to
Modi,’ said Rajamani Venkataraman, managing director, IIFL Holdings Ltd.
‘Decision-making has been improving
with project clearances taking place faster.
The new government is also taking steps to
attract more Foreign Direct Investment and
there is renewed focus on improving
domestic manufacturing capabilities with
an eye on job creation. I think that the full-
fledged recovery of the economy is only a
matter of time, may be six to 12
months away if things move the way
it is moving,’ Venkataraman added.
The conference was scheduled to
be headlined by India’s Finance
Minister Arun Jaitley, but he was
hospitalized in India. Those who
addressed the conference included
William J Antholis of The
Brookings Institution; Zafar
Sareshwala, chief executive officer,
Parsoli Corp; Dr Ajit Ranade of the
Aditya Birla Group; and Ashish-kumar Chauhan, chief executive
officer, Bombay Stock Exchange.
At a panel, ‘An Inside and a Global
Perspective on Prime Minister Modi’s
Economic Growth Strategy: Community
Neutral and Inclusive’ moderated by Anil
Bhandari of Morgan Stanley Investment
Management, Antholis and Sareshwala
noted Modi has both advantages and chal-
lenges going ahead.
‘I spent some time with Modi some two
years ago when I was studying effective
states and ineffective states in India,’ said
Antholis. ‘I found that first thing Modi did
was to focus on water and electrici-
ty and ensured people pay for that
and that worked very well. Also,
Modi had an inspirational connec-
tion with his people in the state and
that made him hugely popular in
‘Modi can do things centrally to
streamline the water and electricity
supply process. But, in five states
where his party is not in power, he
could face tensions if he tries to
manage things centrally.’
Sareshwala felt Modi understood
the fundamentals of governance very
early and he made sure people had
access to water, electricity and roads.
‘He tried this model first in Gujarat and
we all know that it worked,’ he said. ‘I have
no doubt that he, being an exceptionally
honest personality, would be able to put an
end to corruption in India.’
‘Business and consumer confidence coming back’
From left, Anil Bhandari, William J Antholis and Zafar Sareshwala at the event. PARESH GANDHI