You bought a property in 1998 in 12 lakhs. This is 2012 and prices seem to have peaked. There is no upward traction in property prices. So you decided to sell your property. You got a customer willing to pay for your property a sum of Rs 60 lakhs. This is mouth-watering. You are all gung-ho about receiving such a big sum and then you read about long term capital gain (LTCG) taxes. Almost 1/5^th of your profit is going to go to the Government. You wonder whether this is going to be right decision. When you see post tax gains, your enthusiasm comes down. There is inflation indexation to reduce your tax liability but this is your right. After all, you pay taxes on the real gain and not the nominal gain which doesn’t factor inflation.

However, you are a smart fellow. You know there must be some ways to save taxes. After all, tax incentive is a way to increase economic activity. Governments are not foolish enough not to give any leeway to save taxes. Here property means house.

The Direct Tax Code (DTC), popularly known in the chartered accountant’s circle as, “the Da Vinci Code” contained important proposals which aimed at curbing tax evasion. Although the DTC has not yet seen the light of the day, yet the insertion of Chapter XA in the Income Tax Act, 1961 through amendments proposed in the Finance Bill 2012, provides the necessary flavour and ingredients as envisaged in the DTC.