Tax exemptions

PRS and PSS are husband and wife and both are IT tax payers,and they are owners of one flat with equal share.

PRS had sold a converted land of 3 years old for 5 crores.
Now PRS wants to purchase a flat in his name for 3 crores.

1.Whether tax exemption is applicable for 3 crores?

2.If yes,under which section it applies?
Asked 1 month ago in Income Tax from Bangalore, Karnataka
Sir whether the converted land is held for more than 3 years. If yes then he can get tax benefit by investing in one more flat for 3 Crores. It is exempted U/s. 54F
Shyam Sunder Modani
CA, Hyderabad
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Sir answer already provided
Shyam Sunder Modani
CA, Hyderabad
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Hi,
1. Flat sold for 5 Crores. Capital Gain amount not disclosed. You can claim Capital Gain Exemption for the 3 Crores proposed to be invested in buying a new house
2. You can claim exemption under 2 Sections. Section 54EC & 54F. 
Section 54EC is for investment in Capital Gain Bond - REC or NHAI. Upto Rs. 50 Lakhs to be invested within 6 months from the date of sale of the Land.
Proportionate Exemption u/s 54F for the amount invested to buy a new Flat.

If you want a detailed answer, then request you to kindly share the Transaction details.

Hope this has clarified your query. Thanks.
Pradeep Bhat
CA, Bengaluru
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Tax exemption shall be available for purchase of residential property under section 54
Vishrut Rajesh Shah
CA, Ahmedabad
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Hello Sir,

Could you please explain what do you mean by converted land in this context ?

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
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Dear Sir/Madam,

Yes, PRS can avail deduction under section 54EC upto INR 50 lacs by investing INR 50 lacs in NHAI/REC bonds and also proportionate deduction under section 54F by investing in new residential property.

Please feel free to call/revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
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As PRS and PSS are spouses and joint owners, the question of clubbing u/s 64 needs to be considered. 
What is this conversion of land of 3 years old for Rs 5 Cr? Does it mean the land will be sold/transferred for Rs 5 Cr. If it is a gift, there will not be any tax liability. If it is a sale, there will be capital gains but still the likely hood of clubbing of income cannot be ruled out if documentation is not proper.
If it is a gift, the exemption is u/s 56. If it is a sale, the capital gains will be charged u/s 45.
B Vijaya Kumar
CA, Hyderabad
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