Monday, February 23, 2009

Capital Gain -54B,54EC,54F COMBINED


on Monday, February 23, 2009

Actually sir i am into a very big Dilemma to save on taxes {capital Gain} on the sale of land of my grandmother {Mother's mother}. My grandmother sold an ancestral land of agricultural but in urban limits of 1.70 acres which was sold for Rs1.30 Crores and a flat for Rs.12,00,000 in October 2008. 

How can i save the capital gain taxes which would be 20 %, i came to know about three options of saving the capital gain taxes which are as below:

  1. - She can invest up to Rs 50,00,000 in Tax saving Bonds.
  2. - She can purchase a agriculture land of the same amount.
  3. - She can purchase a Residential house of the amount, as she don't have any residential property in her name.

Now my queries are :
  1. Is the information i am having is correct? 
  2. Can my grandmother Invest the taxable income into all the three options clubbed together,which i have mentioned above.
  3. Can she gift the income to my mother and aunt (masi)? and would that be taxable in there hand or in my grandmother's hand? it cant be termed as tax free?
  4.  What would be the best available option to save on the capital taxes you will suggest.
  5.  Also i have heard that she have to invest the amount within 6 (six )months from the sale of land to save the capital gains. is that true?as some have also suggested me that in case of agriculture land i get one year time also to reinvest to save capital gain tax. or will i have to invest the amount before 31 march'2009?
  6. As the property market prices are going down i was thinking that if i get some more months like say another 5-6 months to invest the money into property to save on taxes, so will that be possible? Is there any option you can suggest Sir? I have heard about a Capital gain account which can be opened in SBI bank's in which account i can keep my money for two (2) years and will have to invest that amount into a residential property within a span of two years to save on capital gain tax.
  7. Also can she purchase a Residential plot ,other than residential house to save the taxes?
  8. What would be the lock in period of Bonds, residential property or the agricultural land which i intend to purchase, so that i can resale that without paying capital gains on them.
  9. Is there any provision of making the amount as gift into the name of her daughter  what would be the tax liability and how much would be the gift tax in that case Please kindly guide me to save on the taxes as the matter is bit complicated and i am not able to get the right advice form any one related to this Field.
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You have done your Home work very well ,and now its easy for me to answer your queries.

First of all, let me clear that whole of the sale consideration of the Land is not Taxable but only capital gain is taxable in her hand.

How to calculate capital gain.

Sale consideration after sale expenses=XXXX
Less: Indexed cost of acquisition.=XXXXX
Capital gain=XXXX

  • Calculation cost of acquisition:we will take Actual cost of land or value as on 01.04.1981 which ever is higher.
  • Cost of Indexation(check from here) :we will take Index of year in which asset was sold, divided by index of the year in which asset is given to your grand mother.

Example:suppose cost as on 01.04.1981 was 100000 and your grandmother becomes the owner of the asset in year 1990-91 and sold it in 2008-09 then cost of acquisition will be as under:

cost of acquisition(100000)   X   Cost inflation Index 2008-09(582) /cost inflation index 1990-91(182) =319780 say 3.20 lakhs.

so capital gain will be around 130-3.20=126.80 lakhs


To save the above capital Gain you have exactly three methods as you have already pointed out.

  1. She can invest up to Rs 50,00,000 in Tax saving Bonds.:Your views are correct but ,I would like to invite your attention that 50 Lakh Limit is for a financial year .As the assets are sold in October 2008 ,your six months will expire in April.So technically you can purchase 50 Lakh bonds in 2008-09 and next 50 Lakh in 2009-10.
  2. She can purchase a agriculture land of the same amount.:yes she can ,she have to purchase ,agriculture land amount equal to capital gain to save tax u/s 54 B with in 2 years from transfer of the original land .so she can purchase up to October 2010.
  3. She can purchase a Residential house of the amount, as she don't have any residential property in her name: yes she can u/s 54 F .To exempt the capital gain ,net sale proceed is to be invested in house.she can use this scheme even if she has own one residential house on date of transfer of the original asset( in this case agriculture land.)(two house under 54 F read details from Here)
Now Point wise answer to your queries are here under

Is the information I am having is correct? 
  • The detail is given above ,In case of bonds you can invest up to 1 crore(50lakh each in 2008-09 and 2009-10 Financial Year) . 
  • In case of bonds(section 54EC) :only capital gain is required to be invested
  • Agriculture land(section 54B) : only capital gain is required to be invested 
  • House u/s 54 F :net proceed is required to be invested.
Can my grandmother Invest the taxable income into all the three options clubbed together,which I have mentioned above.
  • All these option are independent to each other so your grandmother can use this option in any combinations ,as suitable to her .

Can she gift the income to my mother and aunt (masi)? and would that be taxable in there hand or in my grandmother's hand? it cant be termed as tax free?
  • If you are thinking that income tax can be saved by distributing the income by way of Gift then you are wrong .If your grand mother Gift this money to their daughters then their will no impact on capital gain tax of your grandmother.However if it had been done earlier by giving gift of land it self to their daughters , in that case tax will be calculated separately in your mother's and your Maasi's account.
What would be the best available option to save on the capital taxes you will suggest. 

  • As you are not interested in Land Purchase then you should try your hand with house and partial in Bonds.Capital gain can also be deposited if you think that you have better opportunities to invest which can give you better return after depositing the tax as compare to return on House purchased or bonds.If your thinking to invest in house with in two years time then go maximum for bonds .As in this case we have to deposit money in capital gain scheme first and then hose have a look in period of three years so total lock in period will be % years . so you should go for bonds ,if your planning to buy house after 2 years .(read this post for details-CAPITAL GAIN BOND U/S 54EC Vs CAPITAL GAIN PAYMENT)

Also I have heard that she have to invest the amount within 6 (six )months from the sale of land to save the capital gains. is that true?

  • Time Period for each section is given as under .6 month period is only under section 54EC i.e for bonds. 
  1. Section 54B : Agriculture Land is to be purchased with in 2 years from date of transfer.
  2. Section 54EC: with in 6 Month from  date of transfer.
  3. Section 54F : Can construct house with in three year or can buy house one year before and with in two year from date of transfer. 
As some have also suggested me that in case of agriculture land i get one year time also to reinvest to save capital gain tax. or will i have to invest the amount before 31 march'2009?

  • As per above answer, time limit has been explained.31 March 2009 is not a mile stone for any of the section explained above.

As the property market prices are going down i was thinking that if i get some more months like say another 5-6 months to invest the money into property to save on taxes, so will that be possible? Is there any option you can suggest Sir? 

  • Time Limit is already explained as per above.

I have heard about a Capital gain account which can be opened in SBI bank's in which account i can keep my money for two (2) years and will have to invest that amount into a residential property within a span of two years to save on capital gain tax.

  • If amount of capital gain arising from the sale of old asset is not used for section 54 B (agriculture Land) or House (section 54F) before the due date of furnishing of income tax return or furnishing of return which ever is earlier then the balance unused amount should be deposited in designated banks under capital gain account scheme 1988 .
  • if capital gain amount unused has not been deposited under the scheme then the amount of capital gain will be taxable in the previous year as long term capital gain it self no matter it is actually used by the assessee for the purpose as given in the two section above.
  • if the amount deposited in capital gain scheme as per above wholly or partly has not been used with in the three year from the date of transfer of old asset and purpose then the unused amount will be taxable in the hand of the assessee in the previous year in which three years expires from date of transfer of old asset as long term capital gain.

Also can she purchase a Residential plot ,other than residential house to save the taxes?

  • On purchase of residential Plot only , there is no exemption.Moreover if you have availed exemption under section 54 F then if you will purchase a new house with 2 years and construct new house with in three years from date of transfer of agriculture land then tax saved by you, u/s 54F will be taxable in your hand.So future purchase of house is restricted .More over if your grand mother sold the House purchased to claim the exemption u/s 54 F with three years from date of purchase or construction then also tax exemption will be withdrawn.

What would be the lock in period of Bonds, residential property or the agricultural land which i intend to purchase, so that i can resale that without paying capital gains on them.
  • Lock in period for section 54 B agriculture Land and 54 EC is Three years.and for 54F already explained above.
Is there any provision of making the amount as gift into the name of her daughter. what would be the tax liability and how much would be the gift tax in that case. 

Hope these will resolve your queries.

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  1. Still i am having one doubt left that is can i divide the amount of Rs1.40 Cr into :
    Rs 50 lacs into NHAI Bonds, and the remaining amount of Rs 90 lacs can i deposit into capital gain account in a nationalized bank and later on(in 2 years period) can i buy a house and a agriculture land out of that Rs 90 lacs? or i can only buy a residential house of that amount?

    Also what would b the rate of interest the nationalized bank would give me on the capital gain account that i will be putting my money in, and would there be any lock in period for that?

    One last query, if i deposit the amount into Bonds , then can i break the bonds in the 3 years time frame and reinvest the amount into residentail property to save on taxes and gain the opportunity if the real estate prices comes very low?

    It would be nice to hear your sound and helpful advice soon

    ReplyDelete
  2. Dear Friend,

    As i have told you above that ,you can save 1.00 crore in tax saving bonds , 50 Lakh in 2008-09 and 50 lakh in 2009-10,subject to six months with in the transfer of your land.

    second you can deposit the amount in capital gain scheme balance amount and can use this in 2 years for agriculture land land and 3 years for construction of House or 2 years for purchase of House in 54F . you can deposit in two type of account saving nature of Fixed deposit nature .interest are similar as given in normal saving /FD account. you can deposit in one go or in lots subject to that all money should have deposited in capital gain scheme before furnishing /due date of Income tax return for ay 2009-10.

    Third,break up of Bonds is not possible /allowed or you can not take loan against them.

    ReplyDelete
  3. One last query in this matter, will i have to deposit the money in the capital gain before 6 months form the transfer of land? Please clear my this last doubt.

    Thanking you
    Saurabh sarda

    ReplyDelete
  4. Dear Friend ,

    You can deposit the amount before the due date for filing of your Income Tax return or furnishing of your ITR for the AY 2009-10 ,which ever is earlier .6 month time from date of transfer applies in case of bonds u/s 54 EF

    ReplyDelete
  5. Hello ,
    As march is over and the tax furnishing dates are nearer,there is a contradiction with the opinions form you and my CA. As i have already asked you in my earlier blog about what would be the deadline(the last date) to invest the capital gain money into capital gain account of a nationalized bank. (i have sold the agriculture land on 17/10/2008),you suggested that the time what i would have will be 1-2 years i.e tax furnishing dates for year 2009-2010..but My CA here is suggesting me that i need to deposit the amount in the capital gain account within 6 months,from the date of transfer of property (by 17 april'2009)..
    Kindly throw some light on this matter and please specify me what would be the deadline for me to deposit the ,moeny into capital gain account and also the deadline for purchsing the new house property.it would be great if you can explain me by giving the dates,rather than explaining in financial assesment terms.You have already mentioned the time limit in earlier mail, but i am not clear about the time limit is from the transfer of land or form assement year.my doubt is would i get time of 2 years form october 2008-october 2010 for investing into residential property or time uptill march 2010 and would i need to deposit the money in the capital gain account withing 6 months i.e in april'2009 to save on capital gain or can i wait till 2 years.

    kindlt help em and guide me in this matter.you response would be awaited, as i have little time left with me.

    Thanks

    ReplyDelete
  6. last date for depositing the unutilized money in capital gain scheme is
    1)filing of your income tax return for 2008-09 financial year or
    2) due date for filing of income tax return31.07.2009
    which ever is earlier.

    further last date to purchase the house is

    17/10/2010

    last date to complete the construction of the house

    17/10/2011

    Last date to invest in capital gain bonds(54EC)

    17/04/2009

    refer section 54F(2)

    ReplyDelete
  7. To avail Sec 54 EC you need to invest an amount equal to Capital Gains , to avail Sec 54 F you must invest amount equal to Net consideration. How do you deal with this situation.

    ReplyDelete
  8. Dear Sir,
    I need an urgent guidance from you.
    I am getting an offer to purchase some agricultural land, as per the circle rate (issue by state govt. for registration duty purpose) is Approx Rs. 19 Lacs. The sales price is approx. Rs.78 Lacs. I shave some doubts to clarify.
    1. The money which I am going to invest (Rs.78Lacs) is all white money. And I would like to register the sales of land in registry office with the exact value paid not as per the govt. circle rates.
    2. Now I am not sure if the seller will accept that, but before proposing him I just want to check my position- If he denies, still I am interested in buying that land. What if I pay the sales value (78 L) and get it register for only the circle rates (19 L), when I sell it in long run (over 3 years) what would be the capital gain tax implication on me (if any). The land is declared agricultural in nature and is more than 8kms form municipal limits.

    Thanks a lot for all your orientation.

    Best regards,
    Dhirendra

    ReplyDelete
    Replies
    1. As the land is more than 8 km from Municipal Limit and is a agricultural Land it is not covered under Income Tax at all . No income Tax act is applicable on such land at all .It does not matter whether you hold such land for one day ,one month , one year or three year ,no income tax what so ever applicable .

      regarding white money you should not waste this as such .As there is no tax applicable on seller ,I don't think he have any objection to receive 78 Lakhs .

      However you can transfer white to another new person and get black from him and purchase the land with white 19 Lacs and get your money returned from the person in white later on at the time of sale of the Land.

      Delete
    2. Thanks you very much Mr. Gupta...Unfortunately I don not have anyone to do the barter of white and vice versa at the time of sales. As you have rightly suggested, would have been the ideal scenario...
      Anyway, to keep my white as white I will insist to write whole the amount in registry even if I have to pay additional duty.
      Thanks a lot once again...And I will probably bother you again for guidance.
      Best regards,
      Dhirendra

      Delete
  9. Dear Sir,
    I have another doubt. Consider this scenario. Father has gifted the property. She wishes to sell the property. How is her capital gains calculated?
    As a general rule capital gains is calculated by deducting the cost of the property and improvement which is inflated based on index released by government taking 1981 as base cost.
    For the daughter who acquired the property say x years after 1981 is the cost taken as cost incurred by father multiplied by the index or is it taken as the cost incurred by father without the multiplying the indexation factor? Is there any tax law pertaining to this or we have to interpret based on laws?

    ReplyDelete
    Replies
    1. PLS CHECK THIS LINK

      http://www.simpletaxindia.net/2010/01/indexation-gifted-asset-year-accusation.html

      Delete
    2. Same case has been confirmed by High Court also

      http://www.simpletaxindia.net/2011/12/indexed-cost-of-gifted-assets-on-cost.html

      Delete
  10. HELLO
    i have a doubt does the entire sale consideration have to be invested or if we invest partially are we entitled to partial tax relief -- sec 54f and slae of residential land

    ReplyDelete
    Replies
    1. Capital gain exemption under 54F is on pro rata basis .If you invest entire net sale consideration then you will be eligible for full capital gain exemption otherwise tax gain is to be exempted partially on pro-rata basis.

      Net sale consideration = gross minus sale expenses

      formula

      Capital gain exempted =

      (amount invested u/s 54F X capital gain on asset sold)
      ------------------------------------------------------
      Net sale proceed of Long term asset sold.

      Delete
  11. Suppose we have a scenario where we have a sale of land worth 50 lacs , land was residential , we invested 10lac in bonds and buys flat of 40 lac does he have to pay any tax .
    also if he decides to buy flat with 10 lac deposit and 30 lac home loan can he still avail of exemption saying that he bought a 40 lac flat?
    so essentially 1) does entire consideration HAVE to be invested otherwise we cant claim any tax relief whatever ie can we say invest half the money and pay tax on other half
    2) can we claim tax relief even if we take homeloan or will the relief be only for deposit

    ReplyDelete
    Replies
    1. Pls refer above reply for section 54F in which i have clearly mentioned that there is no need to invest full consideration. you can invest part and can claim part exemption.

      Further please note that u/s 54EC bonds only capital gain is to be invested not net consideration . In above example suppose on sale of 50 lakh you have 10 lakh profit then full 10 lakh profit can be saved by investing 10 lakh in bonds u/s 54EC and you can use 40 lakhs as you wish.

      Delete
  12. Thank you i was being given strange advice by somebody but commonsense told me that it was not correct and you have helped me to confirm my views

    ReplyDelete
  13. hello sir
    if you buy with a home loan i presume only the deposit made before tax year ends will be counted for tax exemption -- is this correct ? or can i claim the entire flat amount that is home loan plus deposit for exemption for eg if i buy a 40 lakh flat and pay 20 lakh deposit and take 20 lakh home loan can i show to the taxman that i bought a 40 lakh flat hence i am entitled to a 40 lakh deduction of net capital gains payable or can i show only the 20 lakh deposit i made
    thanks

    ReplyDelete
    Replies
    1. you have not mentioned date and what you have sold and under which section and on which date and under which section exemption to be claimed so I can not give specific reply so my reply on few assumption

      Financial year 2011-12
      Net consideration of asset =40lakh(asset assumed not a House)
      capital gain on long term asset sold =10 lakh

      Amount deposited in capital gain account before return filing date =20 Lakh

      In FY 2012-13(after due date for ay 11-12)new house is purchase to claim 54F for 40 Lakh ,20 lakh deposit withdrawn and 20 Lakh loan taken .In this case exemption is restricted to 20 Lakh only.

      if this is not ur case then ask query in detail with tentative dates /amount etc

      Delete
  14. We have a residential property, our first home, which we wish to sell.
    1. What if we purchase an agricultural property and built a house on it. Will that be considered for capital gain exemption?
    2. Also what if we invest the money in multiple properties (lands). Will that be accepted for exemption? or it has to be invested in a single property?
    Thanks in advance,

    ReplyDelete
    Replies
    1. you can save tax by construct on house on any land but cost of land to to extent it will be used to built house can be considered for exemption u/s 54. Further under section 54 only capital gain is to be invested not net proceed received.

      suppose your house is sold in 50 lakh and capital gain is 20 lakh .in this case you have to invest just 20 lakh in new house and you can use other 30 lakh where ever you wish.

      Further there is no exemption in investment of land

      read more from link

      http://www.simpletaxindia.net/2008/05/buy-house-save-capital-gain-on-sale-of.html

      Delete
    2. Thank you for the reply Rajan Sir.
      1. You said cost of land to the extent it will be used to built house can be considered for exemption. Now in our case we are planning to buy a 1 Acre of agricultural land and construct around 1600 sq ft house on it, as 4% FSI is allowed on agricultural land. So in this case cost of 1600 sq ft of agricultural land will be considered for exemption or 1 Acre?
      2. Our current house is in my father's name. Can we purchase 2 properties, 1 in my father's name & other in my name stating that the old house was a first home for 2 families which are now getting separated in two separate houses and claim for exemption?
      3. Also can you please point me to a link of income tax website which talks about this exemption, which I can keep for my reference while filing the tax?

      Thanks in advance.
      Umesh

      Delete
    3. Point wise answer is given below
      1. You can add little more space for garden etc ,but look genuine .
      2. You can purchase two house or more as you wish no bar on it but if house sold is in your father's name then to claim exemption u/s 54 , new house must be purchased on your father's name.
      3. link is given below. A book by income tax department on capital gain .thought book updated few years back but no change in section 54 or major section covered in capital gain.

      http://www.incometaxindia.gov.in/Archive/How_to_compute_capital_gains_2008-09.pdf

      Delete
  15. sir
    Can we apply both section 54f and sec 54ec simultaneously in the same return ?
    i sell a property( long standing non residential -Long term capital gain ) for 50 lakhs, net consideration is 45 lakhs, capital gain is 40 lakhs (calculated after indexation) . then i bought a flat of 20 lakhs and nhai bond of 20 lakhs -- hence i pay no tax is that true?
    NO according to some -- you can either avail bond or buy new house/flat BUT you cannot cannot avail both benefits at the same sitting hence i have to minimum pay tax on 20 lakh
    which interpretation is correct ?
    i hope it is the former!

    ReplyDelete
    Replies
    1. But Under section 54F net consideration is to be invested so you will get pro rata deduction ie 40 X 20/45=17.78 so you have to purchase bonds for (40-17.78)=22.22

      Delete
  16. hello sir
    can you claim exemption by bond investing and buying property simultaneously in the same return (all withing stipulated period in specified bond and within stipulated time for property)
    i have been told that you cannot simultaneously avail benefit of nhai/rec bond investment and buying new property for capital gain tax eemption pertaing specifically to section 54F (long term asset - residential land not a house)
    thanks

    ReplyDelete
    Replies
    1. In my opinion you can claim both sections simultaneously

      Delete
  17. Dear Mr. Rajan Gupta,
    I need an advise from you on the "Clubbing" subject of Income Tax laws. I am an NRI and I am gifting 8O lac rupees to my father and my father is gifting that money to my mother, who in turn is busying some Agri. land on her name.
    Pls. advise if the income earned from the farming will be considered as clubbing for my father's assessment. As I understand that he is giving it as a cash gift not purchasing the lad on her name or transferring the land. Land is being purchased by mother directly, it should not be considered as clubbing for my father.
    Secondly being the Agri income will it have any implication of income tax. Here my assumption is the income may be calculated for deciding the tax slab but only non agri income will be taxed, not the Agri income.
    Thanks you very much for your kind and soonest response.
    Also pls. guide me if you see any other implication of taxes on this transaction.

    Best regards,
    Sanjay Gupta

    ReplyDelete
    Replies
    1. I have given my opinion ..

      First clubbing of income in your father's account

      yes it is to be clubbed ,as per section 64(1)(iv) Income from assets transferred directly or indirectly to the spouse without adequate consideration is to be clubbed . It is a covered indirect transfer.

      Yes ,in case of agriculture income only tax slabs are decided after including agri income and tax is applicable on non agri income.

      My suggestion is to you that do not involve father in this transaction and show direct gift to your mother .Even if these transaction already done then retain you father as a medium of transferring funds only . No need to show that you have gifted to your father and then your father gifted money to your mother.

      Delete
    2. Thanks a lot!!!!
      Just one quick question more..
      Half of the amount I have already transferred to my fathers bank account and he has transferred to my mother's account. How to show that he was just a medium of transferring, I mean what document need to be made for this or it could be just on mutual understanding.
      Depending on this and Just to have single way of money routing can I make the next transfer thru this chain.
      Your soonest responses are highly appreciated.
      Best regards,
      Sanjay Gupta

      Delete
    3. One more question please...
      This land is located in a village 6 kms. from the Town area limits, but that town area even the whole district where that land and town area is not in the notification of Central Govt. "Annexure A - 6th January, 1994" published in Gazette for the Capital Asset consideration under "Scope of Urbanization".

      So will there be any chance of capital gain or any other taxes or re-investment binding or any restriction of time for the sale of this land.

      Thanks you very much for all guidance!!

      Best regards,
      Sanjay Gupta

      Delete
    4. Just create a Gift deed on your mother's name and mention the amount transfer details in it and take acceptance from your mother on it.Further Your father is a medium it can be proved as amount is same no need to create a document . If you want to create a document then write a letter to you father about money transfer and ask him that they should transfer the same in your mother's account and same thing will be confirmed by your father in writing .

      Further you should trnsf directly to your mother.

      regarding capital gain, rules may or may not change in future. Its any body guess.

      Delete
  18. Dear sir,we are six adult children of our late parents sold a house jointly held by us for RS.2.8crores on 27.07.2012 as per legal will of my father.The house was self acquired by my father. In the will he had clearly specified percentage each of us should get from the sale procceds. My share is 25 percent and hence I got a natonalised bank DD for 70 lacs(2.8 crores registration value with sub registrar office).I have deposited the entire 70 lacs in long term capital gains FD account in a natiionalised bank with in three days of receipt.This house was built by my father in 1956.The cost of indexation of acquisition as on 1.4.1981 as obtained by us from a govt approved evaluator in writing is RS.31,61,000 on registred sale proceeds of Rs.2.8 crores.the absolute sale deed mentions the names of all the six children and the amounts received by each through bank drafts.Accordingly I have calculated 25 percent of my share out of Rs2.8 crores,which comes to Rs.790250. My capital gains come to Rs.70,00,000-7,90 ,250 which comes to Rs.6209750. I purchased a new apartment in my name forRs 42 lacks on 6.09.2012 and the total cost of house including registration fee of Rs2,80,000 came to Rs42,80,000

    ReplyDelete
  19. Dear sir, iam extremely sorry for the incomplete query due to internet problem.Let me contiune with a small correctiont that the total cost of new apartment came to Rs.44,80,000. After deducting this amount from capital gains amount i.e. Rs.6209750-44,80,000 iam left with rs.17,29,750 in my capital gains FD account.My query is whether I can deposit the balance amount inNHAI capital gains bonds issued by some bank under 54ec and claim exemption from paying capital gains tax? Should i deposit this amount with in six months? Also please let me know whether I should file my income tax returns immediately or can submit the returns before 31st july 2012.what are the documents I should submit along with my returns to IT dept.Are my calculations ok? Thanks and regards and grateful for immediate reply.

    ReplyDelete
    Replies
    1. yes , you can claim 54EC for balance amount . You can deposit amount with in 6 months from transfer of asset .

      Further No need to file immediate return ,you are required to file return for Fy 12-13 on as usual on 31.07.2013

      Delete
  20. Dear Sri Rajan Babu/Raja Babu, Please tell me how to join your circle?

    ReplyDelete
    Replies
    1. follow by email link is given below ,fill in your email and subscribe free email

      Delete
  21. Dear Sir,

    My wife got a share of Rs. 33.00 lacs from the sale of ancestral property on 15 Nov- 2012. She wants to invest the amount as under.
    1. To purchase a flat jointly with me for Rs. 42 lacs, she will invest Rs 22.00 and my share will be Rs 20 lacs by taking loan from the bank. Flat will be ready in 3 Years ie Jan 2016. 95 % of the cost of the flat will have to be paid by June 2013 and balance 5% at the time of possession .
    2. To purchase a residential plot in her name for Rs. 21 lacs by investing Rs 11.00 lacs from the remaining amount left and by sale of Gold ornaments for Rs 10.00 lacs. One room set will be constructed on the plot of land.

    Now my question is :
    1. Whether by investing Rs 33.00 lacs like this can she save wealth tax.
    2. If any type of tax will be applicable on the sale of gold ornaments.


    Thanks
    XYZ

    ReplyDelete
    Replies
    1. how she got her shares is very important.whether ancestral property is sold to third party or his brothers/sisters has offered his share from their own funds like family settlement.If this is a family settlement or partition of HUF then no tax on applicable on money received and she can invest the money as she likes.

      However if residential property is sold then only capital gain is to be invested not net proceed .

      So please consider full information

      Jewellery is treated as capital asset an capital gain is applicable on sale of jewellery.

      Delete
  22. The share in the property was transfered in her brother's name for the above mentioned consideration. Release deed was executed with considration after payment of stamp duty in the office of registrar.

    ReplyDelete
  23. Further please also advise if this will be considered family settelment however there is no written family settelment document.

    ReplyDelete
    Replies
    1. In my view it seems to be a family settlement but you may take second opinion

      Delete
  24. sir

    the sale value is 20 lac,the capital gain is 10.47lac,investment amount is 6.2lac...here should we use the pro rata formula

    ReplyDelete
  25. Hi Sir, I am selling my flat for 22,75,000 . To avail Capital Gain Tax Exempt should i reinvest the Capital Gain in Vacant Land or a residential house.

    ReplyDelete