Whether to pay capital gains tax this year


I had purchased an apartment in Dec 2003 at Rs 23.5 lakhs and then sold the same in Aug 2014 at Rs 85.5 lakhs. The apartment is in Bangalore.

In Janurary 2014 I booked another apartment at Rs 96 lakhs. Though this apartment was slated to complete by Dec 2016, I paid the entire amount of 96 lakhs under a pre-emi scheme. Under this scheme, the builder would pay 10% interest on 67.2 lakhs(70% of amount paid) for 3 years. Since I booked a under-construction apartment in the same year of selling my original apartment, I thought that I can save on capital gains tax for the FY 2014-2015.

In January 2015, I came to know that there is a dispute on the land on which the apartment is being constructed, hence I cancelled the booking in Feb 2015. But the builder has a clause to refund the money only after the same apartment is sold to another person, hence he has still not refunded the money. He is promising to refund every month, but does not do so(the latest date he has given is Aug 31 2015)

Now, I would like to know if I need to pay the capital gains tax on the sold apartment as I have cancelled the booking. I do not plan to make a fresh booking at least for another year once I receive the money from the builder, and may only go in for a fully constructed apartment in the future. I am planning to file the IT returns for FY 2014-2015 this week.

If I have to pay the tax, how much should be paid? I incurred further 4 lakhs on top of the purchase price of 23.5 lakhs for interiors.

Asked 2 years ago in Capital Gains Tax from Bangalore, Karnataka
As per our view you need to pay capital gains tax on the capital gains arrived on selling of the flat.
For calculations part you need to send the same to our mail Id modani005@gmail.com
Shyam Sunder Modani
CA, Hyderabad
1408 Answers
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  Talk to Shyam Sunder Modani
You cannot claim exemption as you have not acquired the new apartment. Hence, you will be liable for tax on capital gains in the year of sale, i.e., FY 2014-15.
B Vijaya Kumar
CA, Hyderabad
833 Answers
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You may deposit money in an account under capital gains scheme and avail exemption u/s 54, Kindly negotiate with the builder to refund the money before 31 st August 2015 so that it can be invested well in time for claiming exemption. By this investment you get 2 years time for purchase  or 3 years time for acquiring under construction apartment.  If you other investible money, you can invest in capital gain accounts scheme and avail exemption u/s 54 and have extended time for investment in a residential house.
Vijay N. Kale
CA, Hyderabad
248 Answers
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