• Query regarding capital gain

I purchased a residential plot for Rs. 4.5 lacs in November 2010. The registration charges were Rs. 44500/- at that time. I sold this in February 2018 for Rs. 26.5 lacs.                                                                                 l               I  want to purchase a plot and construct a house on it. I am in search of a suitable plot. Would it is advisable to park the proceeds in Capital gain account scheme. I am a salaried employee and earned Rs. 9.3lacs this year. My questions are.        (1) How much amount should be deposited in cgas for zero tax?                                                                                  (2) Under which section this account should be opened.                                                                                 (3) When I will purchase the plot, whether the amount of cgas can be used in it?              
Asked 9 months ago in Capital Gains Tax from Bhopal, Madhya Pradesh
Hii Your case is covered by section 54F of income Tax Act,1961- you have capital gain from sale of any assets and want to purchase Residential property to save tax. your indexed cost of purchase is 1224000 sales price is 2650000 thus capital gain is 1426000. 1. you have to invest whole sales amount in to CGAS to save tax 2. CGAS is for various sections 54,54D,54EC etc. 3. Eligible Properties u/s 54D for tax saving are as under : Purchase of 1 Residential house within 1 year before or 2 year after the date of transfer of such assets construction of 1 Residential house with in 3 years after the date of such transfer thus you can purchase plot and construct the same to save tax.
Lalit Bansal
CA, Delhi
566 Answers
37 Consultations

5.0 on 5.0

Dear Friend, below is the reply of your queries:- 1. You can deposit the whole amount (i.e. Rs. 26.5 Lacs) in Capital Gain Account Scheme with a authorized/approved bank branch. You can deposit the amount for a period of 3 years form the date of transfer of assets. 2. U/s 54 of Income Tax Act, CGA is opened. This section provides exemption from tax on long-term capital gains arising out of sale of house if the gains are invested in purchase of another house either a year before or within two years from date of transfer, or used for construction of a house within three years of date of transfer. In your case you can buy the house between Feb 2017 to Feb 2020 or you can construct the house between Feb 2018 to Feb 2021. 3.Funds can be withdrawn from CGAS account only for purchase or construction of house. let me know for any other query.
Pawan Kumar Sharma
CA, New Delhi
8 Answers

Not rated

1) Amount of Capital Gain of Rs. 1844587 can be invested in CGAS within 6 months from the date of sale or due date of filing of return i.e. 31.07.2018 whichever is earlier. 2) Bank will guide you regarding opening of account. Basically there are two types: FD and Non FD. You can deposit the amount in CGAS max for 3 years and can use it for purchase of residential property within 2 years of sale or construction of residential property within 3 years of sale but not for purchase of plot. (If u have already purchased any residential property before one year of sale that can also be considered)
Bharat Poplani
CA, Zirakpur
56 Answers

4.9 on 5.0

Hi You can claim exemption under 54F. If the amount is not invested before due date of return filing I.e. 31st July 18, you need to deposit the amount in capital gain account scheme. You can withdraw the amounts for purchase of plot and construction thereon. Construction should be done by Feb 21.
Lakshita Bhandari
CA, Mumbai
2243 Answers
81 Consultations

5.0 on 5.0

Dear Sir, Total cost of acquisition is Rs. 4,94,500 and indexed cost of acquisition would be Rs.8,05,413. LTCG would be Rs.18,44,580/-. 1) To avail exemption on entire LTCG of Rs.18.45 lacs you need to deposit entire net sales consideration into CGAS and the cost of construction of new residential house property should be more than net sales consideration. 2) It is a CGAS which can be opened with any branch of nationalized bank. Section is 54F. Deposit the amount before 31.07.2018 if not utilized for the purpose of CGAS. 3) Yes you can use the CGAS for the purpose of purchase or construction of new residential house property. Thanks
Vivek Kumar Arora
CA, Delhi
1718 Answers
51 Consultations

5.0 on 5.0

Hi, The total capital gains in your case is 18.45 lakhs. 1. To gain exemption from tax on the LTCG, you would need to deposit the entire sale proceeds of Rs. 26.5 lakhs in the capital gains account scheme. 2. You will need to open the account us 54F. 3. To save taxes you will need to invest the amount in a residential flat within 2 years of sale of the plot or construct a house within 3 years of sale. Buying a plot will not help in getting exemption from taxes. Hope this clarifies. Regards, Nikhil.
Nikhil Khanna
CA, Mumbai
1426 Answers
19 Consultations

4.8 on 5.0

Hi, Your answers are as below: 1) To avail benefit of Capital Gains Account Scheme, you will have to deposit the amount of capital gains. The capital gains in your case shall be calculated as Rs. 26,50,000/- (minus) [(4,94,500 x 272 / 167) = 8,05,400] = Rs. 18,44,600. 2) It is not compulsory to mention the section at the time of opening of CGAS Account. However, you can mention as 54F if you are asked to do so. Regards,
Sunny Thakral
CA, Delhi
224 Answers
5 Consultations

5.0 on 5.0

1.Entire sale consideration is to be deposited into cgas account to save LTCG tax that will come to around 18.4 lacs approx. 2.Bank will advise regarding opening of account. 3.Yes amount can be utilised for purchase
Swati Agrawal
CA, Indore
689 Answers
1 Consultation

5.0 on 5.0

Hi 1. You will have to deposit entire 26.5 lacs in capital gain deposit account. Or else you can invest INR 18.5 lacs in a infrastructure bond for a lock in of 3 years 2. Under section 54F 3. Yes 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

1) Rs. 26.50 lacs needs to be deposited in CGAS (assuming there are no expenses incurred by you for the sale of the plot e.g. brokerage/commission). 2) you need to deposit before due date of ITR filing i.e. 31.07.2018. 3) You can deposit it multiple times. 4) Not aware of the meaning of undiverted plot but you can purchase the plot and start construction. It should be completed within 3 years from the date of transfer of old plot.
Vivek Kumar Arora
CA, Delhi
1718 Answers
51 Consultations

5.0 on 5.0

Hi, As advised earlier, 26.5 lakhs will need to be deposited. The last day to deposit the amount in CGAS account is 31st July 2018 and yes you can also deposit multiple times. You can buy a plot and construct a house but the construction needs to be completed within 3 years from the date of transfer of the old plot. Hope this clarifies. Regards, Nikhil
Nikhil Khanna
CA, Mumbai
1426 Answers
19 Consultations

4.8 on 5.0

1. It's 26.5 lacs. 2. Last date is before filing your return of income for the current year. 3. Yes 4. Yes
Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

Amount to be deposited with in 6 months from sale.
Swati Agrawal
CA, Indore
689 Answers
1 Consultation

5.0 on 5.0

1. n 2. You need to deposit entire sales consideration I.e. 26.5 lacs before due date of return filing I.e. 31st July 2018. Please refer section 54F. 3. Yes 4. Yes
Lakshita Bhandari
CA, Mumbai
2243 Answers
81 Consultations

5.0 on 5.0

Hi 12.5 lacs, if not utilised till 31st July, shall have to be deposited in capital gains account. It's better to utilize this amount first. You have to fill up the prescribed form and submit it to the bank. (Form C, if I'm not wrong)
Lakshita Bhandari
CA, Mumbai
2243 Answers
81 Consultations

5.0 on 5.0

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