1. Does the buyer need to deduct tax at source on the proceeds he pays to the seller ? 2. Are there ways to save tax on long term capital gain on sale of land ? (Investing in house construction is not an option, since I don't want to invest in property). Looking for capital gains bond if available or any other means. Regards
Hi
1. If the sales consideration is more than 50 lacs and seller is a resident, the buyer needs to deduct TDS @1% under section 194IA.
2. You can invest capital gain into section 54 EC eligible bonds. The bonds shall be redeemable after 5 years. Max. 50 lacs worth bonds can be purchased to exempt capital gains.
We may discuss the issues further.
Dear Sir,
Hope you are doing well !!
1. The buyer has to deduct TDS at 1% of the total sale consideration. Note that the buyer is required to deduct TDS, not the seller.
No TDS is required to be deducted if sale consideration is less than Rs 50 lakhs. If the payment is made by instalments, then TDS has to be deducted on each instalment paid.
2.You can invest the capital gains of up to Rs 50 lakhs in bonds of NHAI or REC, within six months of its accrual and get the exemption u/s 54EC. Such bonds shall be redeemable after 5 years. Only interest received on such bonds shall be taxable. There would be no taxes on redemption after 5 years.
We may assist you in entire procedure.
If the seller is a resident then only if proceeds exceed Rs. 50 lakh, if the seller is a NRI then compulsory yes.
Yes you can invest in capital gain bonds within 6 months of sale upto Rs. 50 lakh or even invest in house if you own only one at the time of sale of such land.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you.
Hii,
1 if sales proceeds is more than 50 Lakhs then yes its mandatory for buyer to deduct TDS @ 1% in case of seller is Resident.
2. yes some other options available such as bonds and working on calculation of capital gain.
Hello,
1. If the sale consideration is more than Rs. 50 Lakhs, TDS @ 1% is required to be deducted by the buyer u/s. 194IA.
2. Yes, exemption u/s. 54EC can be claimed for investment specified NHAI/REC Bonds with lock in period of 5 years upto Rs. 50 Lakhs in a F.Y.
I hope that this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Thanks for the responses. On the tax saving option, are there any capital gains bonds (54EC) open right now ? I browsed the web, but couldn't find anything. If open, would appreciate pointing me towards the link for applying. Thanks
many banks are providing services for 54EC bonds, you can also visit below link
Will check and revert to you. However, in case there are no open issues, your time limit of 6 months would get extended. In many cases, courts have allowed investment beyond 6 months if issues were not open during 6 months period.
Yes there are many bonds like REC bonds etc.
You can check here: https://www.hdfcsec.com/productpage/54-ec
Many banks provide with the Capital Gain tax savings bonds. you should contact the bank you are currently banking with.
Hi,
You have 6 months time to invest in Capital Gain Bonds. These bonds will be open regularly.
You can visit the website of either National Highways Authority of India (NHAI) or Rural Electrification Corporation (REC) to check whether any Bonds are available or when they are likely to open a new issue
Hello Sir,
1. Yes, buyer needs to deduct TDS. TDS deduction is the responsibility of the buyer.
2.Yes, you can save the taxes by investing the amount in 54EC bonds subject to certain conditions.
