Dear Sir,
1) Closure of CGAS account is normal. File application on plain paper to branch manager.
2) You need to pay LTCG tax @20% on 10 lacs.
3) It is a matter of litigation.
Capital gains and CGAS account
Hi, I Sold my flat on 12th may 2016, & opened a CGAS a/c(with IDBI) after making rough calculation of Rs. 14 Lacs as Capital Gain on july 2017. However when my Tax consultant filed last year's Return he calculated actual Capital Gains to be around 10 Lacs and showed it in my Return. Unfortunately I was not able to buy any property within 2 years that is by 11th May2018. My Questions: 1) What is the procedure to close my CGAS account in this case and withdraw my whole 14 lacs from there(since I haven't bought any property within 2 years so would have to pay Capital gain tax so this CGAS account becomes irrelevant to me)? 2) Will there be an issue due to difference of approximate CGAS amount made(14 Lacs) and Actual LT Capital Gain showed in Returns(around 10 Lacs)? 3) My Tax consultant told me I have to deposit the 2 Lacs Capital Gain Tax(20% of 10 Lacs) within this July itself. Is this correct or is there still a way to Save on this Capital Gain tax? 4) I was actually into Agreement to Buy a re-sale property since September 2017 but due to inability of the Seller to get a prior NOC from the (Indian Railways Welfare Organisation) which built this property I was not able to buy this property within due date and thus I cancelled the Agreement recently. Can I show this as an excuse and get exemption from paying Capital Gain tax if I buy another property within few months? Thanks
Asked 6 years ago in Capital Gains Tax
Hi,
Please find below the response to your queries.
1. Closure of CGAS account can be done in the normal course. You can get in touch with the branch manager.
2. There should not be any issues as your estimates are bigger than the actual capital gains.
3. Your tax consultant is correct. You will need to pay 2 lakhs capital gains tax.
4. This will be subject to litigation.
Hope that clarifies.
Regards,
Nikhil.
Hi,
1. You just need to submit a form prescribed by your bank to withdraw the money.
2. No issues.
3. Yes, he is correct. If you withdraw the money now then you will have to deposit the tax. If you don't withdraw now, then no need to pay tax.
4. Yes, you can show this as an excuse but tax department may arise issues and raise demand on you.
I would recommend you to buy such a underconstruction house which is getting completed before May 2019. This will help you to take benefit of exemption u/s 54.
Please feel free to call/ revert in case you need more clarity.
Thanks and regards
Abhishek Dugar
CA CS B.Com
HI,
You may close the CGAS by informing of the incident to your banker and ask them to close the account. They might request for capital gain tax to be paid and challan to be shared. If you decide to paytax, you need to pay on 10 lacs only.
If any question comes later, you will have to answer them with proper calculations. You may need to revise the last year tax return which is time barred now.
You may decide to still the hold the account and look for an under construction property, the construction of which can be complete within next one year. There are case laws which defend the position of investing in an under construction property and giving the exemption even if the construction is not complete within 3 years.
Also, please note that the cancelled agreement with the railway authority would not work.
If you need any further help, you may get in touch with me.
Thanks
Damini
Hi
1. You can apply to the bank for closure of account specifying the reason therein.
2. No problem.
3. You can save taxes if you buy an under construction property whose construction shall be completed by May 19 I.e. 3 years of transfer. Or you can purchase a land and construct a house on the land by May 19.
Otherwise, tax has to be paid in July 18 with interest.
4. No. That would not be an allowable reason. You mat opt for option as stated above in pt. 3.
1. To close the CAGS account ,you have to approach concerned bank officials of that branch.
2. Benefit taken on Capital gain will be reversed and you have to pay ltcg tax on 10 lacs @20%.
3.Yes he is correct.
4.It is advisable to invest in another property ,rather entering into litigation because such excuse may not work and demand can be raised on you.
1) You have to approach your Assessing Officer and apply for permission to close the CGAS Account. Alternatively, you can still buy a residential land and say that you want to construct a house or buy an under-construction house from a builder (Since there is 3 Years time for Construction)
2) That shouldn't be an issue if the Calculation reported in the Returns is Correct
3) Yes. You need to pay the Capital Gain Tax now. However, as mentioned in Point 1, you can still defer the tax payment by 1 Year only if you are intending to construct a house
4) This excuse may work. But can't guarantee it. Besides, the e-Return utility will automatically calculate tax when you select option of reversal of Section 54/54F exemption. Better option is to buy under-construction house which is nearing completion or buy residential land and start construction of house
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