Capital gain tax

You need to file your return of income showing capital gains of Rs. 17Lakh and then claim deduction for property purchased in Sept 2017 if you do not own more than 1 house property apart from the purchased one.

1) you can keep it in saving bank account and claim exemption against house purchased in sept17 so there is no need to pay tax on it.

2) You need to show the transaction in ITR. It is mandatory.

Hi,

Is the old property was the land ( section 54 F) or the residential house ( section 54). Exemption is available only in case if the new property is the residential house and following conditions are being satisfied.

Differences between these two Sections:

Section 54

1) To claim full exemption the entire capital gains have to be invested.

2) In case entire capital gains are not invested - the amount not invested is charged to tax as long-term capital gains.

3)This exemption will be reversed if you sell this new property within 3 years of purchase and capital gains from sale of the new property will be taxed as short-term capital gains.

Section 54F-

1) To claim full exemption the entire sale receipts have to be invested.

2) In case entire sale receipts are not invested, the exemption is allowed proportionately.

[Exemption = Cost the new house x Capital Gains/Sale Receipts]

3) You should not own more than one residential house at the time of sale of the original asset.

4) This exemption will be reversed if you sell this new property within 3 years of its purchase or construction OR if you purchase another residential house within 2 years of the sale of the original asset or construct a residential house other than the new house within 3 years of sale of the original asset. Capital gains from the sale will be taxed as long-term capital gains.

you are required to give details in ITR to claim exemption.

Hi

Since you had made an investment in house property within 1 year before the sale of old property, exemption from capital gains can be availed.

The capital gain and the reinvestment needs to be shown in the Income tax return.

#I assume that both the properties in question are residential house properties.

Hi,

Assuming that both the properties that you bought and sold are residential house properties, you need not pay any capital gains tax on the 17 lakhs since you have bought a residential house property within one year before the sale of the property. There will be no issue if you keep the money in savings account.

You should disclose these transactions through the ITR you file. This is a must and not an optional thing.

Hope that clarifies.

Regards,

Nikhil.

Hi,

Assuming both the properties are house and not merely a land, you will be allowed exemption u/s 54 and you will not have to pay capital gain tax.

Yes, you will have to claim this exemption while filing your return of income. We can help you in filing your ITR.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hi,

1. The 8 year old property would attract capital gain taxation on 17 lakhs. However, you have purchased a new property already. Thus, the capital gains are exempt. If you keep this amount in savings bank account, it will not attract taxability as long as you can justify that you have already purchased a house.

2. You need to report the complete transaction in the income tax return. In the return form there is an option where in you can choose that you have invested the sale proceeds in buying a new house and hence the capital gains become exempt. Therefore, file the information in the tax return.

Thanks

Damini

Hello,

You can claim benefit u/s 54 while filing your tax returns.

Make sure to declare both the transactions in your return.

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