Can I get rebate of Rs 12,500 against tax paid on long-term capital gains on equity?

I am 70. My income for 2020-21 is Rs 1 lakh and LTCG on sale of listed shares is Rs 4 lakh. My tax liability will be Rs 10,400. Will I get benefit under Section 87-A, thereby making tax payable nil? Also, can I deduct long-term capital loss (LTCL) from the LTCG from sale of shares?

Amit Maheshwari, Partner, AKM Global replies, "Since tax payable in the given case is on LTCG on sale of listed securities, no relief u/s 87A is available and tax payable shall stand at Rs 10,400. As regards your other query, LTCL on sale of shares can be deducted from LTCG on sale of shares and tax liability shall be accordingly modified."

I have rented out a 2-BHK flat, for which I am still repaying the home loan. I live in a rented house and plan to buy a 3-BHK flat. I will get possession of it in three years. The value of the new flat is higher than my loan eligibility. I may not get the complete amount as a housing loan since I already have an existing home loan. If that happens, I will sell the existing flat to bridge the gap. Is this a good plan?

Jayant R. Pai CFP and Head - Products, PPFAS Mutual Fund replies, "Using the sale proceeds of the older house, to partly fund the new one is feasible. It will also help you avoid long-term capital gains tax (if any) if you reinvest the proceeds within the permissible time limit. Section 54 of the Income Tax Act grants you an exemption if you sell a property and use the proceeds to purchase a maximum of two houses. The new properties must be purchased either one year before the sale or two years after the sale of the property. However, given that real estate is a relatively illiquid asset, it is important you time both legs correctly so that you are not left with a funding gap."