• Tax liability

I sold 2 sites through power of attorney mode 4 months back. Now I want to invest the sale proceeds in fixed deposit in bank with my father as first ac holder and me second holder. My father is retired and I have also taken vrs.  I want to know whether we can make the fixed deposits without any tax liability or are we accountable in any way because the amount is around 11 lakhs. Plz advise.
Asked 10 months ago in Income Tax from Coimbatore, Tamil Nadu
Hi If you are investing in fixed deposits, the capital gains shall not be exempt. You will have to pay capital gain taxes. To exempt capital gains, you can either invest in a residential house property or 54EC bonds.
Lakshita Bhandari
CA, Mumbai
2235 Answers
80 Consultations

5.0 on 5.0

Hi, There are 2 parts to your question. Firstly, the sale proceeds of the sites will be subject to capital gains. So depending on the price at which you bought the site, you will need to pay Capital gains on the difference. To be exempt from the capital gains tax, you will need to invest the sale proceeds in a residential apartment or in the bonds as specified under section 54EC. Secondly, regarding investments in FD's, the interest will be taxable. However, if you do not have any other source of income, then the interest on Rs. 11 lakhs will be below the taxable threshold and there will be no taxes. But if you invest in FD's you will have to pay Capital Gains tax. Hope that clarifies. Regards, Nikhil.
Nikhil Khanna
CA, Mumbai
1424 Answers
19 Consultations

4.8 on 5.0

Deposit some amount in REC bonds for which you can avail exemption and deposit some funds in FD for handsome interest. for FD amount you will not get exemption. Lock in period for REC bonds is 3 years Thanks
Vivek Kumar Arora
CA, Delhi
1713 Answers
51 Consultations

5.0 on 5.0

As it was a capital gain the exemptions allowed under sections 54 are clear. If you invest in any other residential house, investment in Rural Electrification corporation only you can claim. if you want you can invest under capital gains account schemes with banks (its similar to FD) to the limited period. If you are about to purchase a residential house you can hold the investment in CGAS till 3 years (if u construct) 2 year (if you purchase). If you want to invest in any other fund to claim exemption from tax you can invest in rural electrification corporation funds.
Murugesan Ashok
CA, Erode
13 Answers

Not rated

Hi, You will have to calculate capital gain from sale of these sites. If capital gain is there, then in order to save taxes, you will have to invest the amount in another house property or in specified bonds. You can put money in FD. Please feel free to call/ revert in case you need more clarity. Thanks and regards Abhishek Dugar CA CS B.Com
Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

If you invest sale proceed in FD ,you have to pay capital gain tax..in order to save capital gain tax you need to invest in residential property or in REC bonds.
Swati Agrawal
CA, Indore
689 Answers
1 Consultation

5.0 on 5.0

Hi, You will have to invest the amount in your name only, since your father was not party to the sale of property. You can invest the same in Capital Gains Scheme of Banks or go for REC/ NHAI Bonds. In all the cases, interest shall be taxable. Regards,
Sunny Thakral
CA, Delhi
224 Answers
5 Consultations

5.0 on 5.0

Hello, The income earned by you on selling of the website is taxable, so is the interest income which will be generated from the Fixed Deposits. Trust this clarifies your query. Feel free to call / get back in case of further clarifications. Thanking You. Regards, Rohit R Sharma BCOM, FCA, LLB, CERT. FAFP
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

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