Need advise on saving Capital Gain

Dear Sir,

Hope you are doing well !

Hi

You can claim a tax exemption under Section 54 F on your LTCG obtained on the sale of a long term asset other than residential house/property say a plot of land. The LTCG is exempt if invested in : The purchase of a residential house/property within 1 year before or within two years of the sale of the plot of land.

you are using your entire sale proceeds to buy a house property you may end up paying no tax on your gains when – You satisfy all these conditions

(a)Purchase one house within 1 year before the date of transfer or 2 years after that

(b) Construct one house within 3 years after the date of transfer

(c)You do not sell this house within 3 years of purchase or construction

(d)This new house purchased or constructed must be situated in India

(e) You should not own more than 1 residential house (other than the new one) on the date of transfer

(f)You do not purchase within a period of 2 years after such date or construct within a period of 3 years after such date any residential house (other than the new one).

When you satisfy these conditions and invest entire sale proceeds towards the new house – you won’t pay any tax on your gains. However, if you invest a portion of the sale proceeds, the exemption will be the proportion of the invested amount to the sale price or exemption i.e cost of new house x capital gains/net consideration.

By Investing in Capital Gains Account Scheme

Finding a suitable seller, arranging the requisite funds and getting the paperwork in place for a new property can be a harrowing and time consuming process. Fortunately, the Income Tax Department understands these limitations.
If you have not been able to invest your capital gains until the date of filing of income tax return (usually 31st July) of the financial year in which you have sold your property, you are allowed to deposit your gains in a PSU bank or other banks as per the Capital Gains Account Scheme, 1988. And in your return claim this as an exemption from your capital gains, you don’t have to pay tax on it. However, you must invest this money you have deposited within the period specified by the bank, if you fail to do so, your deposit shall be treated as capital gains.

Section 54EC (applicable in case it is a long term capital asset)–Purchasing Capital Gains Bonds

What happens if you do not intend to purchase another property, there is no use of investing the amount in a Capital Gains Account Scheme. In such a case, you can still save the tax on your capital gains, by investing them in certain bonds. Bonds issued by the National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) have been specified for this purpose. These are redeemable after 3 years and must not be sold before the lapse of 3 years from the date of sale of the house property. You are allowed a period of 6 months to invest in these bonds – though to be able to claim this exemption, you will have to invest before the return filing date. The Budget for 2014 has specified that you are allowed to invest a maximum of Rs 50lakhs in a financial year in these bonds

Please have a phone consultation for detail discussion.

Hi, you can save capital gain by the following method:

If you are using your entire sale proceeds to buy a house property subject to following conditions:

1. Construct or buy one house within 3 years after the date of transfer

2. You should not sell this house within 3 years of purchase or construction

3. You should not own more than 1 residential house (other than the new one) on the date of transfer

4. You do not purchase within a period of 2 years after such date or construct within a period of 3 years after such date any residential house (other than the new one).

When you satisfy these conditions and invest entire sale proceeds towards the new house – you can save on capital gains. However, if you invest a part of the sale proceeds, the exemption will be the proportionate

Hello,

For capital gain exemption, you have investment options u/s. 54F and 54EC. 

Either you can invest the sale proceeds in a residential house property by either purchasing or constructing it within the prescribed time period, Or invest the capital gain amount in Sec. 54EC specified bonds within the prescribed time period.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

Hi,

You can save taxes if you build a residential house on the new plot (you intend to acquire) within 3 years from the date of sale of existing plot.

If you want to claim 100% exemption from capital gain, the cost of plot + construction cost should be equal to or more than the sale consideration of existing plot .

You need to construct the residential property on new plot to get full exemption from capital gain taxes.

However, the construction must be completed within 3 years of transfer of old plot.

Please note that in order to claim exemption, you need to invest the capital gain amount if a house property is sold. However, in case of sale of a land/plot, entire sales consideration needs 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]

We may assist you in entire procedure.

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

You can purchase one house and invest whole sale consideration to save 100% capital gain.

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

Thank you

If you are just buying plot it won't save your capital gain you'll have to construct a house to save capital gain.

its residential plot not house so can use section 54EC  investment in Bond upto Rs 50 Lac & 54F to buy or  construct resindential house only buy plot not sufficient you have to consturct house within 3 years of transfer of original asset

Capital gain can be saved by investing the capital gain amount in another residential plot. This plot should be purchased within 2 years from the date of sale.

Hi

To avail exemption you need to construct a house on it.