Section 80TTA and 80TTB
Section 80TTA is a tax saving scheme for people investing in immovable property such as buildings, land, etc., with a motive to sell it in the three years of purchase.
The investment under this section can be either commercial or residential.
Nevertheless, if you invested more than one crore INR, you must obtain registration from the Income tax department. There is no requirement to register if your investment does not go beyond one crore INR.
In section 80TTB, there is no constraint on the investment amount.
You can invest 50 lakhs INR without any sort of registration. Additionally, you need not pay any Income tax on capital gains.
This is valid only when you trade the property after five years of its purchase.
How is Section 80TTA different from Section 80TTB?
1. Registration is essential:
If you are investing in immovable properties with a value of more than one crore INR, then registration is the need of the hour for Section 80TTA. But, for investments in immovable properties that are less than one crore INR, you do not require registration.
2. Save taxes as a taxpayer:
Under Section 80TTA, you will save 15% tax on the entire cost of the property. On the other hand, in Section 80TTB, you will save 30% tax on the entire capital gain.
3. Time frame:
In section 80TTA, the time frame for selling the property is three years. On the contrary, under Section 80TTB, the time frame for sale is five years.
4. Capital Gains:
The distinction between these two sections is that under Section 80TTB, you will pay a 30% tax on the capital gain, while under Section 80TTA, you will pay a 15% tax.
5. Cost deduction
Under section 80TTA, you can deduct 15% of the cost from the payable income as a Taxpayer, while under section 80TTB, you can abstract 20% of the gain by selling the asset.
If you vend an asset valued at 10 lakh INR, you will acquire ₹2lakh after paying tax.
Under section 80TTA, the tax paid on 2lakh INR will be 0.15 lakh which is 15% of 2 lakh INR.
According to section 80TTB, the tax paid on the 2lakh INR would be 0.20 lakh INR will be 20% of 2 lakh INR.
Therefore, the total result is that you will obtain 0.05 lakh INR more than what you claimed.
What are the eligibility criteria for Section 80TTA?
Individuals with yearly income below 2.5 lakh INR are eligible for asserting Section 80TTA. You must be an individual having a PAN card and must be a dweller of India.
Section 80TTA is accessible for every kind of investment, comprising residential and non-residential.
How much money can I claim Under Section 80TTA as a taxpayer?
This section enables you to claim around 15% of the asset's rate.
To illustrate, if you purchase a house holding a value of 50 lakh INR, then the maximum you can allege is 7.5 lakh INR.
For non-residential properties, you can claim upto 10 lakh INR, whereas for residential properties, the maximum amount you can claim is 7.5 lakh INR.
What are the eligibility criteria for Section 80TTB?
- Individuals having yearly income above 2.5 lakh INR are eligible for claiming Section TTB. You should be an individual holding a PAN card and must be a dweller of India.
- Individuals who invest in immovable properties like buildings or land are apt for this scheme.
- You can claim 30% of the capital gains for investment in immovable property. For instance, suppose your property is sold for one crore INR; then you can claim 300 lakhs INR.
- You can claim the whole amount of capital gains for investment in movable property.
What is the process to claim Section 80TTA?
- To obtain this benefit, you must fill out Form 16A (TCS) and deliver it with other documents to the Income Tax Department.
- The form must be filled out within three years of the date when the asset was obtained.
- If you cannot file the income tax return online within the given time, you will be unable to claim the deduction.
How to claim Section 80TTB?
- To acquire this perk, you should file a declaration form stating that you have financed in immovable property. This form must be filed within three years of the date when you bought the asset.
- After the declaration, you must file an income tax return online mentioning the asset details bought. The return must be filed within one year of the end of the financial year.
- If you do not fulfil any of these conditions, then you cannot assert the advantages under either of these sections.
Can I assert both Section 80TTA and 80TTB?
Yes. You can aver both the schemes together. Nevertheless, you must file two individual income tax returns.
If you are willing to claim both deductions, you must file two declarations – one for every scheme.
When is the right time to claim- Section 80TTA or Section 80TTB?
These provisions were accessible from April 1, 2016, onwards. Nevertheless, if you file the return before April 1, 2017, then you will acquire the benefit of the former tax rate pertinent to the capital gain.
Who is entitled to claim Section 80TTA/80TTB?
- Individuals having a yearly income of more than 2.5 lakhs INR are entitled to assert Section TTB/TTA.
- You must be a dweller of India to obtain the advantages of this provision.
Final Thoughts
Section 80TTA is for individuals investing in immovable property. It enables them to deduct the cost of acquisition against their taxable income.
On the contrary, Section 80TTB is meant for people investing in movable assets. They can claim the full value of capital gains as a deduction.
Both schemes permit individuals to claim a similar amount of deduction. Yet, they vary in means of eligibility criteria.
If you are stuck in comprehending Section 80TTA or Section 80TTB and require any guidelines, feel free to reach out to Lawgical India. Our experts are always ready to serve you. Contact us right away.
