Applicability of section 54

Applicability of section 54

I purchased a residential plot in june 2014 for Rs 105000. Other expenses were 45000 stamp charge and 10300 other taxes. I sold it in april 2019 for Rs 4800000. Now i want to purchase a plot in better locations and construct a house thereof;
My query are :
1- How much is my capital gain.
2- Am i eligible for getting long term capital gain benefit under section 54 by purchasing a plot and constructing a house
2- Timeline for the same; as earlier before 31 july, capital gain were either to be reinvested or deposited in capital gain account. But as income tax has revised the guidelines for ITR submission, what is the deadline for depositing the amount in capital gain account. Amount is still un-utilized with me.

Asked 5 years ago in Capital Gains Tax

The stamp duty of 45000 on land valuing 105000 is a bit high I guess. According to me value of land would be 1050000.

Capital gain taking land 105000: 46.06

Capital gain considering cost at 10.5 lakh: 34.69 lakh.

No you are eligible for 54F as you have sold land and constructing house.

You need to either use it till 30.11 or deposit in capital gain account.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo

CA, Jaipur

4303 Answers

101 Consultations

Talk to Naman Maloo

I assume the cost is mentioned correctly - 105000.

1. Capital Gain would be around 46 lacs

2. Exemption would be available under section 54F.

3. You need to deposit the amount of consideration unutilized in CGDS account before actual date of filing of return or 30th Nov 20, whichever is earlier. Construction should be completed by April 22.

Lakshita Bhandari

CA, Mumbai

5687 Answers

943 Consultations

Talk to Lakshita Bhandari

Dear Sir,

Hope you are doing well.

To calculate the capital gain & long-term capital gains tax payable, the following formula is to be used:

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer),

In your case, there would be capital gain of Rs ~ Rs 46 lakh.

It is calculated as below:

Sale consideration -Indexed COA (including stamp duty, taxes & other expense)= (Rs 48 lakh- Rs 1.93 lakh )= ~ 46 Lakh.

The indexed COA= Rs 1,60,300/240*289=Rs. 1,93,027.

The capital gain will be taxed at 20.8% i.e. 20.8% on ~ 46 lakh.

2. You can get the exemption u/s 54F.

3.You need to deposit the amount of sales consideration in CGAS on or before 31st Nov 2020.

We may assist you in entire procedure.

It is advisable to take a phone consultation for detailed discussion.

Payal Chhajed

CA, Mumbai

5189 Answers

303 Consultations

Talk to Payal Chhajed

Hello,

1. As per the details provided, the LTCG Long Term Capital Gain would be Rs. 46 Lakhs approx.

2. You are eligible for exemption u/s. 54F for the investment of the sale consideration in either purchasing or constructing a residential property.

3. The due date for income tax return filing has been extended to 30th Nov. 2020. Same if the deadline for depositing the amount in the capital gain account.

I hope this answer satisfies your requirements. For proper capital gain calculation or preparation and filing of the income tax return, you can contact us directly or take a phone consultation.

Regards,

CA Hunny Badlani

Hunny Badlani

CA, Madhya Pradesh

2608 Answers

16 Consultations

Talk to Hunny Badlani

CG will be approx. 46 Lacs. Yes exemption will be available under Sec 54 on purchasing the plot for construction of property. The construction should be completed within 3 years from date of sale. If the plot is not purchased till 30th Nov same should be deposited in Capital Gain account scheme.