Personal Finance
You should also look to invest a part of the money in an equity savings scheme or a hybrid debt plan depending on your tax situation
Updated : Mar 16, 2018, 05:25 AM IST
From your question, I have assumed the following:
1. The new Mumbai flat was bought after April 1, 2005. If so, the indexed cost of the flat will be Rs 60 lakh approx. (Rs 25 lakh cost multiplied by cost inflation index of approx. 280 for the financial year 2018-19 divided by 117 being cost inflation index for the financial year 2005-06). Based on this indexed cost of Rs 60 lakh your taxable long-term capital gains (LTCG) tax will be Rs 65 lakh. Since that is the cost of the Bangalore flat the entire long-term capital gains would be exempt provided the sale of the new Bombay flat is completed within one year of the purchase of the Bangalore flat.
2. You have not mentioned your age neither the details, other income that you might have and the amount you would like to generate for yourself nor the particular annuity option chosen when you bought the Jeevan Akshay plan.
In the absence of these details, it is not possible to provide any specific recommendations. But here are a few pointers that you can examine:
Even though the pension amount of Rs 2 lakh odd receivable from LIC may appear good at present, please remember it will remain fixed for the entire duration. In the 20th year, the figure will be equivalent to Rs 66,000 annually and it will continue to reduce in value as years go by. So you need to plan the number of years carefully (including the fact that your spouse may outlive you and you need to make provision for her as well).
Hence this needs careful planning and most likely will mean that you will have to take some small exposure to equity also to protect yourself from inflation over long periods of time. If eligible, you should look at investing Rs 15 lakh in senior citizen saving scheme and may be another Rs 15 lakh in PM Vaya Vandana Yojana both of which are providing a fixed rate of interest higher than the current fixed deposit rates.
You should also look to invest a part of the money in an equity savings scheme or a hybrid debt plan depending on your tax situation. This will provide the necessary cushion for the inflation you are bound to face in the future.
3. Please consult a fee-only advisor so that you get proper to advise on this matter.
It is not clear what the beneficial ownership pattern is, in your existing flat. If the entire money for the flat was paid by you then irrespective of the fact that your wife is a joint owner or not the entire capital gains will be taxable in your hands.
In your case, it is difficult to calculate the applicable long-term capital gains (LTCG) without knowing the fair market value of the flat as on April 1, 2001. But whatever be the taxable long-term capital gains , if it is re-invested in a new flat then the entire amount will be exempt.
Just make sure that the amount is invested within the specified time limits. All the beneficial owners of the old flat need to be beneficial owners in the new flat but you are free to have other joint owners such as your children as well in the new flat.