How to invest long term capital gain

You can do so by investing the entire sale consideration and claiming exemption under section 54F.

What is your sale date?

You need to deposit the amount in capital gain Account scheme of government before filing return of income so till then you can use it as you want.

You need to purchase the flat within 2 year i.e. deed should be in your name eventhough you might get possession in few months.

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1) Yes you can invest in flat to save tax.

2) No issues if you have already one flat with you.

3) If no investment decisions taken before filing of ITR post the transfer of the land then you need to deposit the amount in CGAS to save tax and not in bonds or FD.

4) If registry will be done within two years and possession thereafter then no problem otherwise you need to get the possession within 2 years.

Dear Sir,

Hope you are doing well !!

There are numerous slabs and sections under which you can save on tax if you reinvest your long-term capital gains.

Section 54EC: You can claim tax exemption by using the amount you gain from selling an asset to buy bonds issued by NHAI and REC.The bonds should be bought within 6 months of the sale of the asset. The maximum amount you can invest in this way is Rs. 50 lakh. It will lock your money for 5 years.

Section 54F: You can claim total tax exemption by using the money you gain from selling any asset (except a house property) to buy a house property, which needs to be bought one year before the sale or two years after thse sale. For under-construction properties, the new property should be ready within three years of the asset’s sale. 

Capital Gains Account Scheme (CAGS):  if you do not get a chance to invest in a profitable property immediately and still want to save your long-term gains from being taxed, you can invest your capital gains in CGDAS by approaching any public sector bank. The timeframe for the purchase or construction of the property remains unchanged in this case as well. But you can utilise this account momentarily so that you save your gains from being taxed and have more time to finalise a property for reinvestment.

It is required to deposit such unutilised capital gain in the capital gains account before furnishing return of income but not beyond due date for furnishing return of income.

Hi

Yes, you may invest in a residential house property in order to claim capital gain exemption.

Exemption shall be available under section 54 F.

If the sales consideration is not invested before due date of return filing I.e. 31st July of relevant assessment year, the amount needs to be deposited in Capital gain deposit account. Before such date, amount can be invested elsewhere.

If you are investing in a ready to move in property, investment should be made within 2 years from the date of sale.

If you are investing in an under construction property, construction should get completed within 3 years from the date of sale.

Since you only own one house, you can purchase another house for claiming exemption. You should purchase a residential house either 1 year before the date of sale or 2 years after the date of sale. In case you are constructing a house, you will have to construct the residential house within 3 years from the date of sale. Till you purchase the house, the capital gains is to be deposited in the Capital gains account scheme (in any branch
of public sector, bank) before the due date for filing income tax returns. Till the amount is transferred to Scheme, you can create FD. If you want to buy bonds, it should be done in 6 months’ time from sale.

You need to invest the entire sales consideration if the property sold was a land.

If it was a house property, only capital gain amount needs to be invested.

For whole capital gain to be exempt, the whole amount (i.e. net sale consideration) should be invested in new flat otherwise proportionate exemption will be available.

You need to invest full amount which you received from sale as you are going to claim deduction u/s 54F of the act.

Hi

You have to invest full sales consideration for claiming capital gain tax exemption.

Hope it helps

Hi,

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

In case entire sale receipts are not invested, the exemption is allowed proportionately.
[Exemption = Cost the new house x Capital Gains/Sale Receipts]

No you wont have to pay 20% on remaining 25% amount of sale. You will have to pay 20% tax on remaining 25% of capital gain.

If you purchase a land you wont get any exemption. But if you purchase a land to construct house then also you will have to invest entire capital gain to claim 100% exemption.

If you bought house with 75% of amount you got from sale of land you still have to pay 20% tax on rest 25% amount.

No, if you purchase land instead of house, you will be not be able to claim any exemption.

The new property must be residential house property.

- Yes you will get exemption of long term capital proportionate to amount invested i.e.75%. Not on remaining 25% of sale consideration, it is balance long term capital gain which will be taxable.

- If the nature of land sold was industrial then you can invest in industrial land otherwise either in bonds or pay tax.

You need to invest in a residential house property only. And the entire sales consideration needs to be invested. If you buy a land, you need to construct a house on it.

The capital gain taxtax calculat shall be like-

20% of [capital gain *(amount not invested/sales consideration)]

Hi

Yes balance 25% will be taxed @ 20%plus cess. 

If you purchase land then no deduction will be available. You have to invest in residential property only. You can construct property on land purchase, but with in limited time frame. 

Hope it helps 

Hi,

Following conditions attached to claim exemption:

1. A new residential house property must be purchased or constructed to claim the exemption
2. The new residential property must be purchased either 1 year before the sale or 2 years after the sale of the property/asset.
3. Or the new residential house property must be constructed within 3 years of sale of the property/asset.

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

In case entire sale receipts are not invested, the exemption is allowed proportionately. 
[Exemption = Cost the new house x Capital Gains/Sale Receipts

Yes if the index value as per 2001 if 50,000 you need to pay tax only on Rs. 50,000/-

Yes, capital gain tax @20.8% i.e. 10,400 on Rs.50,000. 

Indexation should be of 01.04.2001

Yes, it is right.

Yes. Capital gain value in that case will be INR 50k and capital gain tax on it will be 10k (20% of 50k).

Yes, you need to pay capital gain tax only on Rs 50000/-.

Yes, your understanding is correct. 

You need to invest the capital gains and not entire consideration to claim exemption. 

You need to pay tax on the capital gains earned by you.  If you have made part investment, tax is payable on the balance amount. 

Exemption is not available on land purchase, hence entire capital gains would be taxable.  Yes you have to pay tax only on Rs 50,000.