• Capital gain account withdrawal query

Hi Sir / Ma'am, 

I sold my property in 2019 Oct. And opened a capital gain account last year. Now, when i have booked a new property, i have paid the entire capital gain amount in first installment. New property is under construction.

Request your diligent guidance - 

1) Is it mandatory to close a capital gain account post withdrawal of entire money from same. What if we do not close the account but have all valid docs of amount transfer - demand draft in name of builder etc 
2) If yes, then, is there a timeline for closing the a/c. Will i have any tax liability in current FY if i close it post-pandemic i.e. next FY.
3) Do i physically need to go to concerned authority (jurisdiction AO) for closure - since it's in my hometown (UP), i do not want to travel during current pandemic
4) Is there linkage to time of possession. Please note - the DD to the builder has already been issued.

Lastly, Please be generous - a piece of smart advise on how to close the account without any hassles would also help. I have been told that the concerned authority doesn't easily facilitate closure and makes demands.
Asked 1 month ago in Capital Gains Tax

1. Yes it is mandatory to close capital gain deposit account to justify that capital gain amount has been utilised as per the relevant section.

2. Before expiry of time limit as per the relevant section of exemption. you can close it by Oct 2022

3.Yes. In UP, I can assist you.

4. Time limit as per relevant section of exemption 

 

You have claimed exemption on the basis of deposits in capital gain account but ultimately you have to invest the amount in the property to claim exemption. How will the authority come to know that you have invested the amount in the property and within time limits. Therefore it is mandatory to close the account. 

Vivek Kumar Arora
CA, Delhi
4190 Answers
380 Consultations

5.0 on 5.0

Hi

 

The account should be closed. It can be done later. There would be no tax on late closure of account.

You need to visit the jurisdiction officer of your AO and get the form signed from AO. 

 

As a condition to your capital gain exemption, the construction of the property should get completed by Oct 22.

Lakshita Bhandari
CA, Mumbai
5539 Answers
629 Consultations

5.0 on 5.0

Hi

 

1. Yes it is mandatory to close the capital gain account.

2. No there will be tax liability on the same.Timelimit is 22 oct.

3. Yes but me may assists you.

4. Please have a phone consultation for details discussion. 

Karishma Chhajer
CA, Jodhpur
2439 Answers
27 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

1. Yes, it is mandatory to close a capital gain account post withdrawal of entire money from same.

 

2. No, there will be no tax liability on the same.

 

3.Yes but we may assist you for the same.

 

4.The construction must be completed within 3 years of transfer of assets.

Payal Chhajed
CA, Mumbai
5125 Answers
171 Consultations

5.0 on 5.0

- There is no need to worry. Registry of property is not mandatory. Possession of property is deemed as ownership. If you have invested entire capital gain without possession, still there may be some judicial pronouncements in your favour as the delay in possession is not under your control.

Vivek Kumar Arora
CA, Delhi
4190 Answers
380 Consultations

5.0 on 5.0

Hi

 

Although this condition for completion of construction within 3 years is monitored by the income tax department in very rare cases, this condition does exist.

As per your agreement with the builder, if the expected date of completion is before Oct 22 and the possess gets delayed and due to the pandemic, it would be a valid and genuine cause for condonation of delay.

Lakshita Bhandari
CA, Mumbai
5539 Answers
629 Consultations

5.0 on 5.0

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