Dear Sir/ Mam, I sold a property in June 2018. For which 1 % TDS was deducted by the buyer. I do not come under any Tax bracket as I am not employed and the business that my wife and I jointly run is in my wife’s name for which we file ITR in her name. So I am assuming that it is only my wife who comes under any tax bracket and though I help her in business I am a non-earning individual. My Questions are:- 1) The TDS certificate shared by the buyer shows Assessment Year as 2019-2020. So I am assuming that I can claim this TDS only in financial year 2018-2019 (AY 2019-20) which will be filed before 31st July 2019. Is my assumption correct? 2) The profit that I have made from the above mentioned property sale will attract capital gain tax and I have to either invest it in a residential property or in some 54EC bonds to save tax. I understand that I have to park this amount in a Capital Gain Account before 31st July 2018 (If I intend to invest in some residential property) or in 54EC bonds within six months of sale of the property. I do not intend to buy residential property so I must invest my money in 54EC bonds. But the problem is that currently I am in a remote area with limited banking facility so it is not possible to buy 54EC bonds from here, though I can open a capital gain account here. So, my plan is to park the money in capital gain account before 31st July and within 6 months shift the same to 54EC bonds. Later, in case of over subscription or unavailability of 54EC bonds my money will be untaxed in the capital gain account. Is my understanding correct? Thanks and Regards Sanjeev Shah
Hi Sanjeev,
All your understanding are correct except one.
You can't use the money parked in cgds scheme to buy bonds.
So if you intend to buy bonds...Don't park the money in cgds scheme. You will have to buy bonds within 6 months from the date of sale of old asset
Dear Sir,
1) Yes your understanding is correct.
2) Restriction with 54EC bonds is that you can not transfer them within a period of 3 years from the date of purchase of such bonds and the limit for investment is Rs. 50 lacs only. Also you can not take any loan against such bonds.
Thanks
Dear Sir,
Hope you are doing well !
1. Yes, your understanding is correct .
2. You need to invest in these bonds within 6 months from when the capital asset was transferred. The maximum amount of capital gains that you can invest in these bonds is Rs50 lakh. However, in case of jointly held assets like real estate, each owner has a separate limit of up to Rs 50 lakh for investing in these bonds. Therefore, all the bonds specified under section 54EC issued on or after 1 April, 2018 will come with a tenure of five years. If the bonds are redeemed before the completion of five years, then you will lose the tax benefit. This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.
Thanks & Regards,
Payal Chhajed
Hi
1. Yes.
2. You can invest in 54EC bonds within 6 months of sale. If opting to invest in residential house property, you need to deposit the amount of capital gains in CGDS before 31 July 2019. Please note, not by July 2018 but July 2019.
For investment in 54EC bonds, you don't need to park the funds in CGDS at all.
Hi Sir,
1.As the property is sold in current financial year the TDS can be claimed by you on or before 31st July,2019 post completion of the current financial year.
2. The amount of Capital Gain shall be parked in Capital Gain Account scheme for the period of 2 years if you intend to buy a property or you can directly invest in the bonds. There is no point parking money in the capital account scheme now as you do not intend to buy or construct a property as the money so parked if not utilized for buying a property shall be taxable after 2 years.
On the other hand,For investing in 54EC bonds you can visit http://www.recindia.nic.in/forms and fill the details online. There is also collection banks & branches list where you can submit the forms in offline mode.This will also help you in saving time.
Hope this resolves your queries!
Dear Sir,
1) You understanding is correct except to park the money in capital gain account.You do not need to park the money in capital gain account.
2)You will have to invest in 54EC bonds within a period of six months after the date of such transfer.
Warm Regards,
Karishma Chhajer
Dear Sanjeev Shah,
1) Yes, Your assumption is correct.
2) Firstly, in order to claim exemption under sec.54 the property that you have sold must be a Long Term Capital Asset (LTCA). Assuming that the property you have sold is LTCA your are eligible for exemption either by reinvesting the all your sale proceeds in a Residential House property or either investing in bonds U/s.54EC.
3) Investment under Sec.54EC should be made within 6months from the date of sale of property. If your are depositing your sale proceeds in Capital Gains account you can withdraw the same only for purchase of house property or for construction of house property. Investing in 54EC bonds is not possible after depositing funds in Capital Gain Account.
Hi Sanjeev,
Yes most of your understanding is correct except the one on investment in the bonds. You need not park the money in Capital gains deposit account. You need to invest in the bonds within 6 months from the datr of sale.
Hope that clarifies.
Regards,
Nikhil.
Hi,
For buying bonds under 54EC ,you cannot park money in capital gain account scheme,you have to invest in bonds within 6 months from date of sale ,maximum amount that can be invested is Rs 50 lacs.
Else all your understanding is correct.
1. your assumption correct
2. You have invest in capital gain bond u/s 54EC within 6 month of transfer of original assets & if bond not available then period extend to next availability .