I had purchase a property in April, 1986 for Rs. 92,500/-. I sold it in August 2018 for Rs. 46,00,000/-. I have parked this money as FD in my savings accounts (2 FDs of 25 lakhs each). I plan to reinvest this entire amount next year (Around Dec 2019) for purchase of a property. Is it fine to retain this amount in my savings account as FDs ? Do I need to shift this amount into a Capital gains accounts to get income tax exemption and is it too late to do that now ? Plese advice on how to manage the transaction to ensure I don't attract any capital gain liability. Also what is my capital gain on this transaction based on indexation calculation
- Please obtain FMV as on 01.04.2001.
- Keeping in view the original cost, capital gain would be 43 lacs and tax would be around 9 lacs.
- It is advisable to reinvest before 31.07.2019 otherwise you need to keep it in CGAS.
- As of now you can keep it in FD's.
Thanks
First you need to tell the type of property..was it a residential property or agricultural land or normal land.
Secondly you need to tell or find its FMV as on 2001-2002 to calculate capital gain.
Third you can't keep it in your saving account or FD if you are going to invest it in Dec 2019, you need to keep it in capital gain account before filing return of income for FY 2081-19.
Fourth if it's a normal property then you can't save tax just by investing in another property you need to either invest in residential property or in capital gain bonds.
You can get a consultancy session if you want detailed information.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
Hi,
You can keep it in FD's as of now but you will need to deposit in the capital gains account before 31st July 2019 if you are not able to reinvest before that.
For computing capital gains, you will need to get the valuation done of your property as on 01.04.2001 by a registered valuer. On that amount you will get indexation benefit to arrive at the indexed cost. Sales value minus indexed cost will be the capital gains.
Regards,
Nikhil.
Hi
You need to deposit the amount in CGDS account before due date of return filing I.e. 31 July 2019 in order to claim the exemption.
For capital gain calculation, FMV of the property as on 1.4.01 needs to be known. Such FMV shall be considered as COA and shall be indexed.
Hi,
Hope you are doing well !
1. Yes, it is fine to retain this amount in your savings account as FDs.
However, you need to deposit the same in capital gain account before the due date of return filing.The last date of filing ITR is for the financial year in which capital gain arises. Normally, the due date of filing Income Tax return is July 31 for the previous Financial Year. Under extraordinary circumstances, it can be extended by the Finance Ministry.
2. For capital gain calculation, we need the FMV as on 01.04.2001. The FMV will be considered as cost of acquisition. Accordingly, It will be indexed.
Hi,
Yes, you can retain in fds.
If you are not able to reinvest then it must be deposited in capital gain account before due date of filing returns.
We need the FMV as on 01.04.2001 for capital gain calculation.
You need to shift that amount to capital gains account asap, otherwise you won't be able to claim exemption from capital gain on reinvestment.
To calculate capital gain, fair market value of the property on 1/04/2000 will be needed.
See as your property is purchased before 2001 then your base year to calculate capital gain will be 2001-02 so indexation will be 100 and you have to doe fair valuation from approved valuer of the property and apply indexation on that amount, as asset sold is in the year 2018-19 indexation will be applicable for it.
No, you are not late, transfer the funds to capital gains account till you purchase the property, so that you will not attract capital gain tax liability.
• Capital gains earned by selling the property would be exempt from tax if such gains have been used for purchase within one year before or two year after the date of transfer of property or construction of a new house or has purchased a site and constructed a house thereon, within a period of 3 years after the sale of the original house.
• If the amount of Capital Gain is not utilized for the above purpose, then before the due date of filling income-tax return, it should be deposited in a Bank under Capital Gains 1988 Account Scheme. Accordingly, in case you are not able to purchase by July 2019 (due date of filing return for FY 2018-19), you should put it under capital gain account scheme and withdraw for utilization towards property.
The gains earned by you will be long term capital gains in your hand. The capital gains would be sale price less the indexed cost of acquisition. Since, the property was bought before 2000, the Fair value as on 1 April 001 can be adopted as a cost for indexation.
