What is the tax that I have to pay if I sell off the house in which I live in and buy another one?

Say there is a case where you have purchased a house on 1-1-2005 and then purchased another one, 1 year before the purchase of the original one or two years after the purchase of the original one, in this case from 1-1-2004 to 1-1-2007 and have also sold off the original house.
In this case the capital gains that arise from the sale of your original property will not be charged directly but rather dealt with in a different manner which is as follows:

  1. Say the capital gains are greater than the cost of the new house. In this case the capital gains will only be computed on the difference. So if the profit from the sale of your original house is 20 lakhs and the new house is just for 10 lakhs then the tax that you have to pay will be on 10 lakhs. However if you buy a third house then the cost of the second house for the purpose of capital gains calculation will be 0.

  1. If the capital gain or profit that accrues from selling the original house is less than the cost of the new house then there will be no capital gains chargeable to tax at all.

  1. Now say you do not use the entire amount of capital gains towards building or buying a new house, in this case you will need to deposit the money in a specified account for getting exemption. There are rules applicable on when and how much you can withdraw from this account and these are to be followed after seeking legal counsel.

The above explanation is found from Section 54 of the Income Tax Act however this is just an indicative explanation of the act and serves to act as guidance when you are thinking about making such a transaction. Please seek legal counsel to get exact details on how the tax liability would be in your specific case from legal experts before engaging in any transaction of the above nature.   

How is my LTA Taxed?

Leave Travel Assistance (LTA) has got a tax treatment which is quite different from all the other type of allowances and perquisites that you get. And that’s the primary reason it is the one that gets people confused more often than not.
The following points need to be kept in mind while taking the LTA or producing bills for it to get  LTA Exemption:

Can We Claim LTA Every Year?

One of the most common questions about LTA is whether it can be claimed every year or not? The answer is Yes – you can claim LTA every year, but you will not be able to claim LTA exemption ever year.

Other Points About Tax On LTA

  1. If you do not wish to claim LTA in one particular year you can have your employer carry forward your LTA for the next year.
  2. For getting LTA tax exempt you will have to produce bills, but you can’t get your LTA exempt every year.
  3. You can get your LTA exempt twice in a block of four years. Right now the block that is relevant is 2006-2009. This block is decided by the Government so does not have a bearing on when you start your job and also these blocks are calendar years and not financial years.
  4. The bills can be air, rail or even a private rental company however the exemption is only for domestic travel so an international ticket won’t do.
  5. The bills have to be for a journey that has been undertaken when you are on leave and should be for you and your family that is spouse, children and dependant parents, brothers and sisters. Its obvious that your family can’t claim the exemption if you have not accompanied them.
  6. If you and your wife both get LTA – both of you can’t claim exemption for the same travel but you can avail exemption independently for different travels. So effectively between the two of you, you can claim exemptions four times in four years.
  7. If for some reason you fail to claim LTA exemption in the bucket of four years – you still have the option to claim exemption in the first year of the next block.
  8. Only travel bills can be used for LTA exemption, so a hotel bill can’t be produced for claiming LTA exemption even though you might have stayed in the hotel during your leave.
  9. The maximum LTA for the purposes of LTA tax exemption is Rs.20,000 so normally most organizations design the salary structure in such a manner that they don’t give the employees more than Rs. 20000 as LTA.
  10. In terms of proof for air travel – although there is no fixed rule as such, it might be a good idea to preserve the boarding pass along with the ticket to make sure there are no problems in claiming LTA exemption later on.
  11. LTA can only be claimed for the shortest distance between two places. So if you are planning to travel from Goa to Mumbai then you will be allowed exemption on tickets from Goa to Mumbai and back. You will not be allowed to produce tickets that are via some other place like Mumbai to Hyderabad and then from Hyderabad to Goa and so forth.
  12. LTA can only be claimed on tickets or rented private vehicles, you cannot show petrol or diesel vehicles for your own vehicles and then claim exemption on it.

The above are just some of the points that need to be kept in mind while discussing LTA exemptions. Because tax rules keep changing it is best to discuss with a professional before taking any decision.

We encourage you to ask questions related to LTA or any other tax or financial matter, and we would try our best to provide a solution to it.

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Page Industries Limited

Business of Page Industries Ltd.

The company was set up in 1995 to bring in the high end innerwear JOCKEY to the Indian market. While the promoters were associated with JOCKEY for the last 36 years as there sole licensees in the Philippines market with the opening up of the Indian markets in the early 1990s the promoters sought to fill a void in the Indian innerwear market by setting up shop in India and manufacturing, distributing and marketing JOCKEY products in the country. The company has been awarded “the best licensee of the year” for the year 2006 by JOCKEY and enjoys a relationship with the promoters which goes as back as 1959.

Strengths of Page Industries

While the market is being flooded with a host of IPOs following factors differentiate Page Industries with some of the other IPOs slated to enter the market:

  1. Long history which ensures that the promoters are not fly by night operators but rather experts in their chosen field of business having been successfully delivered for over 4 decades now.
  2. High product differentiation in terms of the brand loyalty enjoyed by JOCKEY which is a result of the existence of brand for over 130 years now.
  3. Integrated in house operations which ensure productivity and efficiency. Page Industries have eight adjacent factories in a single location which is engaged in everything that the company does right from cutting the fabric to packaging the finished product.
  4. The company exists in the retail and apparel segment which is expected to grow by leaps and bounds in the Indian market.


The company has grown steadily and at a decent rate in the last few years and the revenues have climbed up from Rs.377 million to Rs.1037 million from 2002 to the fiscal 2005, for the nine months ended 30.9.2006 the company clocked in revenues of Rs.741 million. The company also has a profitable record in the last few years and profits after tax have grown at a steady rate from Rs.17.56 million in 2002 to Rs.113.91 million in the last fiscal. The same is reflected in the EPS which for the last fiscal was Rs.467.75. On top of this the company also had a positive cash flow from operations in the last few years.

Objects of the Issue

Page Industries plans to raise funds for the following purposes:

1. Brand building

2. Expansion of garment manufacturing capacity in existing facility

3. Setting up of new garment manufacturing facility at Bommasandra, Bangalore

4. Expansion of elastic manufacturing facility

5. Expansion of Socks manufacturing facility

6. Corporate head office in the Central Business District

7. Implementation of new generation ERP software ( SAP)

8. Modernization of production process

9. General Corporate Purposes and

10. To meet the expenses of issue


In all one looks forward to this IPO with the hope that the company does not over price its issue and gives investors the chance to buy into this fairly stable and growing company at a decent issue price.