Thursday, March 8, 2012

CAPITAL GAINS ACCOUNT SCHEME (CGAS): save capital gain tax


on Thursday, March 8, 2012

The booming real estate market meant that Kapil Kumar would manage to sell his house in Pune for a neat profit. He had bought the place 10 years ago with the idea that one day he would retire and also move out of Mumbai. However, 10 years on, the price that he was getting for his house was something that he hadn’t even dreamt of. Wanting to make hay while the sun shines, the deal had been completed in a record time. The only hitch that remained was the capital gains tax. Neat profit meant neater tax and he was thinking of ways of saving it. 

He had heard that investing the profit back in real estate does save tax. However, he didn’t want to buy in the current market. A visit to his Chartered Accountant (CA) was warranted. Maybe, he could find a way out.He did!

Kapil learnt from his CA that the Income Tax Act exempts the capital gains from the sale of a house if the taxpayer invests within two years from the date of sale or constructs another house within three years from the
date of sale. If the entire capital gain is not used, proportionate deduction is available.

Now Kapil has two years to buy the new house. However, what if by 31st July, which is the last date for filing the tax return, he hasn’t found the right property? How does he convey to the Income Tax office that he does indeed intend to buy a house within the time allotted to him and hence, will not be paying tax on the capital gains earned during the year? 

His CA advised him to keep the money in a special fixed deposit known as the Capital Gains Account Scheme (GGAS) in such cases.

Let’s assume Kapil earned longterm capital gains of `50 lakh. The tax at 20 per cent on this amount works out at `10 lakh (the 3 per cent education cess is ignored for ease of understanding). Seciton 54 offers him exemption from this tax if he purchases a house (costing R50 lakh) within two years or constructs one within three years.

Prior to 1988, Kapil would have been required to pay the tax in the financial year during which the capital gains arose, even if he intended to buy or construct a house. After purchasing or constructing a house within the stipulated time frame, he could pray for the refund. When he actually receives the refund depended upon
the strength of his prayers. Moreover, it was inconvenient for the Income Tax Office (ITO) to dig up the past records to check the veracity of the claim. 

Enter CGAS
Fortunately, the Tax Department was seized of this impractical approach. CGAS, introduced in 1988, eliminated the need to reopen the assessments for rectifications. Therefore, in effect, CGAS is a special account with banks or specified institutions to be used when the amount of capital gain is not utilised for the purchase or construction of the new asset before the due date of furnishing return of income. (Notification No. 724(E) dated 22 June 1988)

If the amount deposited is not utilised fully for purchase or construction of new asset within the stipulated period, then the amount not utilised will be treated as capital gain of the year, in which the period of three years from the date of sale of the original house expires. 

The salient features
  1. There are two types of accounts;Type-A (savings deposit) andType-B (term deposit). Type-B can be either cumulative or noncumulative.Interest rates will be the same as those applicable to the normal savings and term bank deposits.
  2. The effective date for claiming exemption will be the date on which the bank receives the application,subject to the realisation of cheque or draft. However, the interest will be payable from the date on which cash is paid or the cheque or draft is realised.
  3. Amounts are freely transferable from Type-A to Type-B and vice versa. For premature transfers from Type-B to Type-A, the normal penalties will be applicable. 
  4. Withdrawals can be made only from Type-A by submitting a declaration that the amount sought to be withdrawn is proposed to be utilised for the intended purpose. Where the amount sought to be withdrawn exceeds R25,000, the bank shall make payment by way of a crossed demand draft drawn in favour of the person to whom the depositor intends to make the payment. The amount withdrawn shall be utilised within 60 days. The unutilised portion, if any, shall be redeposited into CGAS. 

A lacunae 
That being said, there does exist some lacunae in this otherwise useful product. Let us see what these are:
  1. CGAS does not allow any withdrawals, except for the specified purpose (of buying the house), even of interest. Moreover, the investor is required to pay tax on this interest (to which he has no access) on accrual basis out of his other income. 
  2. Even if the sale is affected, in say the first month of the fiscal year  (say April ’11), the taxpayer may deposit the amount in CGAS on the last date for filing returns. In other words, he can freely utilise this money for 15 months (April ’11 to July ’12) as he likes. 
  3. We have already discussed the fact that if the amount is not utilised wholly or partly for the desired purpose, within the specified period, the unutilised amount shall be treated as capital gains of the year during which the specified period expires. 
If this amount is to be treated as capital gain of that year, can the assessee purchase another house within two years or construct within three years? Can he use CGAS once again? 

It is illogical to do so and also the fact remains that this capital gain has not arisen out of sale of house, shares,
etc. Therefore, the answers to these questions are in the negative. However, experts believe that the taxpayer has got a right to set off carried forward capital losses against these gains.

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  1. capitol loss put the negative impact on the value of taxes scores and also performance of worker working under the taxes institute

    ReplyDelete
  2. after the expiry of said 3/2 years in CGAS instead of paying LTCG can he purchase 54ec bonds for next 3 years and can he withdraw the amount after the said period of bond without LTCG taxation.

    ReplyDelete
    Replies
    1. No, Capital gain bonds can only be purchased with in 6 months from date of transfer of asset

      Delete
  3. I NEED GUIDANCE AS TO WHETHER I HAVE TO SHOW IN IT RETURN SALE PROCEED OF HOUSE THOUGH I HAVE INVESTED IN ANOTHER HOUSE WITH ADDITIONAL AMOUNT WITHIN 3 MONTHS OF RECEIVING SALE PROCEEDS IN THE SAME FINANCIAL YEAR

    ReplyDelete
    Replies
    1. YES ,You have show sale and investment data in required columns in Income tax return ,use ITR-2 if there is no business income in your hand

      Delete
  4. If i purchase a new property on capital gain within 2 years than do i need to show my capital gain in the present financial year .

    ReplyDelete
    Replies
    1. Please ask query with all facts in detail

      Delete
  5. the LTCG on sale of residential land can be used to transfer of ancestor property

    ReplyDelete
    Replies
    1. If you have actually paid any money for ancestral property(house) then you can claim deduction u/s 54F.But if no money has been paid then no deduction

      Delete
  6. Dear sir,
    I have sold my House and willing to invest the same 40 lacs in purchasing of another in different location after 3 months. Can I use the amount to invest in shares for three months and if I make a quick buck of 4 lacs, then what will be the tax implication>?

    ReplyDelete
    Replies
    1. profit from Investment in shares for short term is taxable @ 15 % .But as per income tax act you have to deposit the money in capital gain account scheme before return filing date applicable for financial year in which you have transfer the old house.

      Delete
    2. You refer to "deposit the Money" in CGAS and I would like to know whether its the capital gains only that needs to be deposited or the entire amount on the sale of house.

      Ex: if I sell my house for 55 lacs in 2012 and as per cost inflation index calculation the value of the house is 40 Lacs as on date. Then the 15 lacs (55-40 lacs) is the capital gains. So, In order to save tax on this 15 lacs I need to deposit this 15 lacs only in CGAS and the rest 40 lacs can be used for my own purpose for a period of 6 months and will use the same amount (40 lacs + 15 lacs in CGAS) to buy a new house.

      Please correct me if iam wrong in this case.

      Delete
    3. Under section 54 you have to deposit only capital gain amount .In given example only 15 Lakh,.

      Further investment in new House also required to be 15 lakh to claim full exemption.

      Note : My personal suggestion to you is that do not look at share market as quick money source ,otherwise you loose at your money. Make investment ,do not trade or speculate . I am telling you my personal experience after wasting my 10 years in share Market.

      Delete
  7. if sm 1 buyed a house cn he also open a account and he wud save tax if he want to buy a new house

    ReplyDelete
  8. Dear Raja Babu,
    I sold my house in Aug,2009 for 90 lacs. I had bought it in 2001 for 20 lacs. This means that my capital gain amount was 70 lacs, which i deposited in CGAS on 28th Sept 2009. I had planned to buy a plot from this money and get a house constructed in 3 years.In Feb 2012 I had bought a plot for 50 lacs and wanted to construct my house but due to some dispute on the title of the plot unfortunately, i have so far not been able to start construction on it. In case i am unable to start with any construction till this Sept End 2012 i will ultimately have to pay 20% capital gain tax. My ques. to u is that will this 20% tax be calculated on the entire 70lacs that was the original capital gain amount or will i have to pay 20% capital gain tax on the non-invested 20 lacs.[(70lacs original capital gain - 50 lacs invested in purchase of plot)].??? And how will i be able to withdraw the non invested 20lacs from CGAS. I will be deeply indebted if you can answer my concern.

    ReplyDelete
    Replies
    1. As per rule if house is not completed then you have to pay tax on full amount. (70 lakh). The second option is to sell this plot and invest money at other place and built house by September,2012

      Delete
  9. If I already have purchased second house before selling the first one. Now I want to sell the first one... First house is more than 5 yr old purhcase. now Can I take Tax benefit for the second house. Second house is not 2 yrs and 1 month old...also suggest if there are any other ways I can save tax

    ReplyDelete
    Replies
    1. No ,you can not take benefit from 2nd house. Only house purchased within one year is eligible.other ways are bonds section 54EC

      http://www.simpletaxindia.net/2008/10/capital-gain-bond-us-54ec-vs-capital.html

      Delete
  10. a senior person sold his house in august, however the following year he passes away in march , before opening Capital Gains Account, i.e. the sale proceeds of house were still in his savings a/c. Now his heirs are filing retn, on his behalf, can they deposit money in capital gains account, or what is other alternative, what is the tax treatment then

    ReplyDelete
    Replies
    1. In my view they can deposit money in CGAS

      Delete
  11. Being the Landlord & a Cess Building I intend to sell the Development Right to a Reputated Builder for Reconstruction of Old Building under Sec 33 (7) DCR Rules. Would like to Know the Tax Implications on amount Recd towards share of Development Rights, this amount will be paid by a Developer in Different Stages till completion of Project.

    Kindly advice pertaining to tax Implications. Assuming amount recd for Developement Right at 10Cr.

    ReplyDelete
    Replies
    1. you should consult CA with complete details as the amount involved is huge . Structure your deals in such a way so that minimum tax implications .

      you may read this link also

      http://www.simpletaxindia.net/2011/07/tips-for-tax-planningcapital-gain.html

      Delete
  12. Further to my question dated 12 August 2012, Landlord of a Cessed Buidling, I would like to also state Property is purchased prior to 1980, & also I understand that for Indexation I have to take 1981 Base price which has to be worked for Indexation purpose.

    I want to know : 1) When Development Right is transferred for Construction of a new tower, and as an Existing Occupant as A Landlord in which I will be getting the same Area Along with Extra Area as per DCR Rules than in that case what would be the TAX Implication, and how to proceed perstaining to sellin of Developement Right.

    ReplyDelete
    Replies
    1. Sorry ,we are not master in these subject

      Delete
  13. To avail the benefit of LTCG(Long Term Capital Gain) one should not sell a house before 36 months. My question is how the 36 months are calculated. Is it based from registration date of the property or posession date of the property. For example Registration date is Jan 2010 and Posession date is Dec. 2010. Then from when the LTCG will start Jan 2013 or Dec. 2013?Thanks in advance.

    ReplyDelete
    Replies
    1. There is nothing clarified in Tax act ,so if property is constructed then registration date can be considered .As in all the section word constructed or acquisition has been used in income tax act no where possession word is used. But it is disputed issue.

      Delete
  14. Dear Sir,
    With respect to "Construct a new house property in the specified period", my query is:
    Does the above phrase include Cost of Purchasing the Land on which the new house property is sought to be constructed?
    In other words, does the cost of constructing the new house property shall comprise of the cost of purchasing the land or will it only comprise of the cost of construction, in its literal sense?

    ReplyDelete
    Replies
    1. Cost of land is part of Cost of construction ,this is as per circular 667 dt 18-10-1993 reproduced here under.

      Whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also
      1. Sections 54 and 54F provide for a deduction in cases where an assessee has, within a period of one year before or two years after the date on which the transfer of a capital asset takes place, purchased, or has within a period of three years after that date constructed, a residential house. The quantum of deduction is itself dependent upon the cost of such new asset. It has been represented to the Board that the cost of construction of the residential house should be taken to include the cost of the plot as, in a situation of purchase of any house property, the consideration paid generally includes the consideration for the plot also.
      2. The Board has examined the issue whether, in cases where the residential house is constructed within the specified period, the cost of such residential house can be taken to include the cost of the plot also. The Board are of the view that the cost of the land is an integral part of the cost of the residential house, whether purchased or built. Accordingly, if the amount of capital gain for the purposes of section 54, and the net consideration for the purposes of section 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction under section 54/54F, provided that the acquisition of plot and also the construction thereon, are completed within the period specified in these sections.
      Circular : No. 667, dated 18-10-1993.

      Delete
  15. Dear Sir,
    I have deposited amount Rs. 15,00,000 under CGAS (Account type B) in Oct 2011.
    now I dont want to invest that amount in house property.
    I want to use money for meeting my personal Liabilities.
    Bank had given me "Form G" to Close above account.

    Now my question is that
    Should I have to pay Capital Gain Tax.
    if yes then what is interest amount if my capital gain was 15,00,000 without indexation.

    Please reply since my Income tax return is due on 31st August.

    Thanks in advance for your time.

    ReplyDelete
    Replies
    1. Dear sir,

      my question is that should I have to pay capital gain tax before closing account or before filing income tax return.

      Delete
    2. You should file return before 31.08.2012. and in return you should claim exemption as intended for deposit of amount in CAGS.

      After 31.08.2012 close the account and use the amount as desired.

      By doing this amount of capital gain will be taxable in FY 2012-13 instead of FY 2011-12.

      Capital gain of last year (FY 2011-12) will be added in your income of FY 2012-13 and no interest will be liable to be paid .

      if you withdraw before return filing / 31.08.2012 then interest on pending tax will be payable @ 8.7 %. so pure saving of 8.7 % on tax due on capital gain amount(around 26000/-)



      Delete
  16. Dear Sir,
    I have sold my residential empty plot for 45 lacs in may 2012, which I had bought for 1lac in the year 1995. I have not invested those money anywhere. I m buying a new flat for Rs. 50 lacs in the next month.
    How do I proceed, I mean I can directly buy a flat with this money or I will have to park the capital gain amount in CAGS first and then withdraw the same for buyin a flat?
    If I wont put the Capital gain in CAGS will have to pay the capital gain tax??

    ReplyDelete
    Replies
    1. You can buy new home directly no need to deposit in CAGS.

      Pls note that on sale date of plot you must not have more than one house u/s 54F

      http://www.simpletaxindia.net/2008/10/capital-gain-bond-us-54ec-vs-capital.html

      Delete
  17. Dear sir

    In Nov. 2011, I sold a flat for which agreement of sale was made in Feb. 2007 & in this process, I got LTCG. I'm making arragements to deposit the LTCG in CGAS. Can I use this money to buy a plot, on which I may or may not build a house in the near future? The cost of the plot would be more than the LTCG.

    Please note that when I purchased and also when I sold this flat, all along I owned another flat.

    Your guidance is highly appreciated

    ReplyDelete
    Replies
    1. You have sold a flat so section 54 is applicable so holding of another flat(one or more ) have no affect on Capital gain calculation.

      Further you can buy plot to save capital gain but you have to build/construct a house with in 3 years from transfer of old flat

      Delete
  18. Dear Sir,
    My mother has recently sold her property in Bangalore for 72 lacs. The LTCG on this is Rs. 60 lakhs. She plans to give me Rs.48 lacs. If I put this money in NHAI for 3 yrs,
    A) would i have to invest the money after 3 yrs in a house
    B) will have to pay tax on the interest I might get from investing in this fund

    ReplyDelete
    Replies
    1. As the capital gain on your mother's name .So NHAI bonds must be purchased on her name only to save capital gain.

      a)As above, no use of investing the money on your name in NHAI bonds .It must be on your mother;s name.Further after three year no need to purchase house.

      B)Interest earned from NHAI bonds is taxable in Investor's hand.

      Delete
  19. After i deposit capital gain from sale of land in CGAS, can i use this fund to pay installments of a flat (which is being built by a pvt. builder). The flat will be handed over to me in 3 years time. regards

    ReplyDelete
    Replies
    1. yes ,You can use this money .In fact this money is kept in CAGS for using it in purchasing/construction of the house.

      Keep in mind that 3 years starts from date of transfer of the old asset

      Delete
  20. Dear Sir,
    My father had purchased a flat. He expired without a will. My mother, myself and my brother sold the flat as legal heirs. Sale amount was equally distributed amongst three of us. Do we have to pay long-term capital gain tax on the entire sale amount (as we had not paid any money for purchasing the flat) or only on gains ?
    Thanks

    ReplyDelete
    Replies
    1. You have to pay tax only on gains, not on entire sale consideration.

      Delete
  21. Sir my mother bought a flat for 10,00,000 in 2010 december by getting amount from our relatives. We had a plot which we have sold in feb 2012 for 16,00,000 and repaid 10,00,000 to our relatives. so what will be the capital gain for us. Will my mother have exemption for 10,00,000

    ReplyDelete
    Replies
    1. No , your mother is not eligible for capital gain relief for house purchased in 2010.

      Further to calculate capital gain on sale of plot (2012) .Pls provided date of purchase and cost of plot

      Delete
  22. dear sir,

    I have invested in Capital Gain Fixed Deposit (B) 2 years ago and it is now maturing in 2 days. Now what are the posiibilities with me to avoid paying the tax.? Can I re invest in NHAI schemes or other bonds?

    ReplyDelete
    Replies
    1. you have to invest in house build or construction . I think built house time also already have expired ,so it better to construct new house with in time specified.

      Further capital gain can not be saved by investing in capital gain bonds at this stage.

      Delete
  23. Can the capital gain be used for closure of home loan so that tax can be avoided?

    ReplyDelete
  24. Dear Sir,
    My father had purchased a flat costing about 4 Lacs. At that time the builder had formed a co-operative society and given only share certificate for our flat. On this certificate, it is mentioned that we are members of the society and we have paid membership fees of a few hundred rupees.

    Now my father has expired and we have sold the flat. We do not have any documentary proof that my father had paid about Rs. 4 Lacs for purchasing the flat. We only have the share certificates on which the price if flat is not mentioned.

    Is it necessary to provide a documentary proof of the purchase price of the flat to Income Tax authorities ? If yes, what should we do to get this proof ?

    Thanks

    TCB

    ReplyDelete
    Replies
    1. Please contact to your builder OR Society.

      Delete
  25. Hello,

    Its mandatory to deposit the amount in CGA? or we can deposit in any other account and re-invest with 1-2 years?

    Please help me to get this answered.

    ReplyDelete
    Replies
    1. My father's property was disposed in Oct'11 and i and my brother have received equal share of 65lac each, which i have deposited in mynormal SB account and also I'm looking for an re-investment of same amount.

      The only thing i want to know will it be a problem for me since i have not deposited in Capital gain account?

      Please suggest me what i need to do now.


      Rgds,

      Delete
    2. if you want to claim capital gain tax exemption , then you must have deposit the capital gain amount in CAGS before return filing due date.
      As you have not done so , and due date already gone (31.08.2012) , now you can not claim capital gain exemption and have to deposit tax on capital gain amount from property sold.

      Delete
    3. what will be the percentage of tax i need to pay.

      Do let me know if any other option you can suggest.

      Delete
  26. Sir,

    I sold my flat in Sep 2010 and had opened CGAS in SBI in March 2011. The cap gains was Rs 900,000 after indexation. The plan was to buy another property, but that didn't materialize. I plan to pay the tax of Rs 180,000 (20%) in Oct 2012. Please let me know if I need to pay any interest on this tax.

    ReplyDelete
    Replies
    1. There is no interest in such case .Further you can keep this money in CAGS till August 13 and can pay tax in august 13 ,if you wish to do so.

      Delete
    2. Thanks a lot for the clarification, Sir.

      Delete
  27. Dear Sir,
    Purchased flat in Feb 2005 for 15.25 Lacs
    - Registration done for 8.3 Lacs
    - Sale agreement for 15.25 Lacs , out of that 13 Lacs loan from IDBI
    - All cheque transaction

    Sold flat in Sep 27 2012 for 33.5 Lacs
    - Registration done for 21 Lacs
    - Sale agreement for 33.5 Lacs
    - All cheque transaction

    Could you please guide me how much would be my capital gain.

    Thanks - Sasv

    ReplyDelete
    Replies
    1. capital gain will be as under

      sale price=33.50
      less :indexed cost of flat

      15.25 X 852(CII for fy 12-13) / 480(CII for Fy 2004-05)

      =27.07

      Capital gain =33.50-27.07=6.43Lakh

      Delete
  28. Sold property in 2004 June for 12 lakh which was bought in 2001. Bought the plot for 10 lac in 2004 dec. Remaining amount used to purchase wood and material. Could not construct the house due to dispute on plot. Is there any need to pay longterm capital gain tax?

    ReplyDelete
    Replies
    1. technically payable but it will be huge amount after interest and penalties , so better to ignore this.

      Delete
  29. Father has sold property in October 2010. The Sale proceed is in Savings acccount. If the tax has to be paid, when should the tax be paid.

    Also can the amount be invested in an under construction house, which will be completed by September 2013 and still avail of CG tax exemption(3 year rule)?

    Pls. advice.

    ReplyDelete
    Replies
    1. As per rule , amount must be deposited in Capital gain account scheme .As you have not kept the money in required account so you are not eligible for deduction.

      Further if you have invested the money in CGAS then yes , you can invest money in under constructed house which can be completed with in three years.

      Delete
  30. This comment has been removed by the author.

    ReplyDelete
    Replies
    1. As the house holding period is less than 3 years , So it will be short term gain . And as per rule you can't save this capital gain tax .

      Delete
  31. Dear Raja Babu,
    I plan to sell a flat. Registry carries a cost of Rs 23,70,000/-. But builder also charged me Rs 1lac for parking, Rs 66,000/- for one time lease (90 yr lease from Govt.) Rs 2,24,000/- as registration charges, Rs 50,000/- for maintenance deposit, Rs 50,000/- for Power Backup. That amounts to Rs 28,54,000/-.

    For indexing purposes should I use the total amount?
    Thanks regards

    ReplyDelete
    Replies
    1. lease amount/parking/registration charges can be added .However maint. charges and power back up charges can not be indexed .

      Though you can take separate money from buyer for power back up and maint, charges

      Delete
  32. Dear Sir
    My mother sold the property on 28th march 2012 and invested in capital again in april 2012
    now for how long can she keep the investement
    ie is cga for 2 years means 2 financial years or 2 years from date of sale

    28 march 2012 - 28 march 2014 or
    28th march 2012 - 28th march 2013

    which is the last date to claim exemption

    regds

    ReplyDelete
    Replies
    1. CGAS is not an investment scheme or capital gain saving scheme it is a interplanetary arrangement . You have to invest the amount in new property before cut off time. so investment in this account can be withdrawn to invest money in house .

      So first ,pls tell under which section you have claimed exception. If want to construct house then money can be retained in this account 3 year from transfer of old property .and if you are interested in purchase of new residential property then you have 2 year period .

      period start from 28 .03.2012 and ends on 27.03.2014/15 as the case may be.

      Further if you are not able to use the money to purchase the new house property then the remaining amount will be taxable i your hand.

      Delete
    2. one property purchased on 16/3/12 from the advance of the property to be sold
      property sold on 28/3/12
      then the capital gain was done in april 2012
      then the next property was purchased on aug 2012 with relevent withdrawls from cga { all requisite forms filled pre and post withdrawl }
      still money is left for the purchase of third property which we want to know , how long can we retain the amount for purchase of ready property in resale { no construction }
      thanks for such an prompt answer

      Delete
    3. oh, Rachni Ji,

      pls tell what you have sold (residential house ) or other long term asset .

      Further you can not purchased multiple properties to save capital gain.

      if you are covered under section 54 then only one property will be considered for capital gain exemption.

      further u/s 54F ,if you buy two properties then no benefit can be claimed at all .

      so pls clarify which section you have availed ,what was sold what price,what was capital gain , how much invested in two properties,and what is balance in CGAS

      Delete
    4. this we consulted and we are told that multiple properties can be purchased as the property sold was of big value and the clause says " purchase of a property " and not one property . there are many instances where multiple properties have been purchased by the seller . its not one property in the written clause , but " a " property .
      this i am sure and have cross checked many a time and there is no confusion
      for purchase of 3 properties the total amount is approx 1/3 for each property and third is still to be purchased

      Delete
    5. yes,you are correct but ............

      any how as already explained you that you can retain money for two years from date of transfer of old asset .

      i.e 27.03.2014.

      before this date you have to invest in third property

      Delete
    6. off topic , you are a blogging very regularly , my suggestion to you that you should combined all the blogs ,if possible.

      Delete
  33. Dear Raja Babu,
    I have sold two properties. Can I buy one single property to save LTCG? Or do I have to purchase two separate properties? Thanks

    ReplyDelete
    Replies
    1. yes, you can purchase on residential house to save cAPIAL gain from sale of two properties .

      Delete
  34. Dear Raja Babu,
    I have sold a flat in June 2012. I want to claim exemption on Capital Gain but I have not yet decided whether I will buy a house or construct it. Is it necessary to decide this before filing return ?

    Can I use above Capital Gain to construct a house on a plot which was purchased 5 years ago ?
    Thanks
    TCB

    ReplyDelete
    Replies
    1. No it is not necessary to decide the option to buy a new house or construct a new house.However you have to deposit the unused capital gain amount in CAGS before return filing due date . Further you can buy new house by June 2014 (2year from sale of flat)or you have to construct new house by June 2012 (3 Year)

      Yes, you can construct house on plot purchased earlier and cost of plot is also to be included to calculated the construction cost/investment .The main condition is that house must be completed with in 3 years

      Delete
    2. Dear Raja Babu,

      Thanks for your reply.

      In the above querry, the flat sold in June-2012 was on only my name (single holder). But the plot which was purchased 5 years ago, had my mother as first holder and myself as second holder. My mother and myself had contributed 50% of the purchase price.

      If I construct a house on this plot before June-2015, can I claim exemption from capital gain on selling flat ?

      TCB

      Delete
    3. No such clear guidelines in Act , but in my opinion yes you can construct house on this land also but 50 % cost of land will be taken towards investment under 54 .

      You may take second opinion

      Delete
  35. Dear Raja Babu,
    I have sold a flat in June-2012 and want to save long term capital gain tax. I have an offer to purchase a house which has already been built, but some legal / government approvals are still pending. I have to pay the price of this house based on a notorised "Satakhat" which probably means "Agreement for Sale" in english. Registered "Sale Deed" ("Dastavej") will be made only after getting the pending Legal / Government approvals which may take more than a year.

    Please tell me the following :
    If I pay the price of the house in next two months based on the "Satakhat" and later if the "Dastavej" is NOT made before June-2014, will I have to pay long term capital gain tax on the sale of flat ?
    Thanks
    Thakkar

    ReplyDelete
    Replies
    1. If you purchased a house and got the possession of house also then it will be treated as deemed transfer u/s 53A of transfer of property act.So in our view you will remain eligible even if you fail to got registered the house by June -2014

      Any how ,as you have said that ,transfer is expected in one year ,so be positive

      Delete
    2. Dear Raja Babu,
      Thanks for prompt reply.
      As the house is already built, I will get the keys i.e. physical possession, immediately after paying the price in two months. Is there any document to be obtained to prove that I have got possession of the house ? If yes, which document and from whom/where ?
      Thakkar

      Delete
  36. Dear Raja Babu,
    I have sold a flat recently and made some long term capital gain. I am planning to buy a plot costing more than the capital gain, before next return filing date. I want to construct a house on this plot before expiry of 3 years. If I do this, is it necessary to open Capital Gain Account ? If yes, how much money I should keep in this account (as capital gain would be fully invested in plot) ?
    Regards
    Chandresh

    ReplyDelete
    Replies
    1. CGAS is to deposit unused capital gain amount . As you have already used amount more than capital gain , nothing is required to be deposited in CAGS

      Delete
  37. Dear Raja Babu,
    Is it true that according to Capital Gains Account (First Ammendment) scheme-2012, for an individual assessee, approval of income-tax assessing officer is required to close Capital Gain Account ? If yes, what is the procedure and how long does it take to obtain this approval ?
    Regards
    Chandresh

    ReplyDelete
    Replies
    1. Approval was required since inception of the scheme to close the the CAGS account . How much time it will take ,you will know only after submitting of your application to AO.

      Delete
  38. I have sold a property after 3 years at 70Lack, purchased at 20L. Property was in joint name of myself and my mother.
    If we make 2 separate investments at different locations one in my name and another in my mothers name how would we be exempted under propert gain tax?
    Considering all the sale amount is invested in 7:3 ratio between myself and my mother.

    Regards,
    Vijay

    ReplyDelete
  39. Dear Raja Babu,
    Based on your reply on 5th November, 2012, I had requested the following information from you, which is still pending. Can you please provide ?

    " As the house is already built, I will get the keys i.e. physical possession, immediately after paying the price in two months. Is there any document to be obtained to prove that I have got possession of the house ? If yes, which document and from whom/where ?
    Thakkar "

    ReplyDelete
  40. Dear Raja babu,

    Before sale of property, can I add 2 joint names to the property, then sell to the builder and request separate cheques in 3 names, so we can then each individually buy 3 separate properties? Will that save capital gains tax as each individual will then pay tax on amount uninvested in property on their separate tax returns.

    Thank you.

    ReplyDelete
  41. Dear Friend,

    My father expired in december 2010. he had a residential plot in his name which he purchased from HUDA. this property was transferred in my name in January 2011. After it was transferred in my name, I paid it's 3 installments in lumpsum. Now, I intend to sale this property. what will be the tax implications?
    Surya

    ReplyDelete
    Replies
    1. please inform when your Father had purchased this property

      Delete
  42. Dear Sir,
    I have sold plot in April 2012 for Rs. 13 lakh which was purchased in 1988 for Rs. 10000. How much capital gains tax need to be paid?
    Presently I have deposited the amount of Rs. 13 lakhs in saving account.
    I want to invest the amount for buying flat in Mumbai in near future say one year.
    Do I need to put the amount in CGAS account? Is this account facility available in all banks say SBI? please advise.
    Ano4Dec2012

    ReplyDelete
  43. We have a flat for 20 Lacs, lets say we sold it for 80 lacs and the captial gain was 43 lacs, now in that case my query is - If I invest the entire amount into a new property there wont be any tax right ? But what happens in case that from the 80 lacs received I invest in 2 properties 40 Lacs each. Will I still have to pay Tax due to capital gains. Please advise. " Does investing in 2 properties server as an exemption from tax on capital gains if the entire amount is invested ? "

    ReplyDelete
    Replies
    1. If property sold is a residential house ,then the case is covered under 54 and only capital gain amount is required to be invested in new house .

      In your case capital gain amount is 43lakh ,so you can purchase one house of 43 lakh for capital gain exemption and balance 37 lakh can be invested else where.Full sale consideration is not required to be invested .

      Delete
  44. If the property is greater than 20 years old, will tax reduce on Capital gains ? How about if the propert belongs to a Senior Citizen can we further save tax.
    Hypotehtical scenario 5 Lacs propert in 1990 now being sold at 1 Cr in 2012, belongs to senior citizen ? Please explain the tax that can be levied on captial gains ?

    ReplyDelete
    Replies
    1. the answer to you question is yes ,old property will get more indexation value .but capital gain is taxed at flat 20 % for senior citizen also.

      further pls provide appox figure so that exact query can be resolved

      Delete
  45. Hi, I have recently sold my house joint property in my dad and my name i.e. June 2012 for 70 lakhs which was purchased for 25 lakhs in year 2005. Now the balance amount 70-25 = 45 is my capital gain. I intend to buy another under construction house in next 30 days. I have few queries please help:

    - Do I need to deposit this 70 lakh(selling value) or 45 lakhs(profit) in Capital Gains account?

    - Can I keep money in my saving account and use it directly when purchasing any house.

    - If I am using my saving account to keep this money and use it as per under construction payment plan... Can I keep it for 3 years.

    - Can I purchase 2 flats using this money i.e. one in my dad and mine joint property and other in name of my wife and mine.

    - If I buy 2 properties using this money but sell one without any gain and use proceeds for first property...Am I laible for any tax ?

    regards

    ReplyDelete
    Replies
    1. 45 lakh is not you capital gain .your capital gain is calculated as under.
      sale price=70 lakh
      less :indexed cost 25*852/497=42.85(497 is index for 2005-06 and 852 is index for 2012-13)

      capital gain=70-42.85=28.15

      to claim capital gain exemption you have to purchase new house for at least 28.15 lakh in joint name of you and your father.if this amount is unutilised till 31.07.2013(due date for filing return fy 2012-13) you have to deposit this balance amount in CAGS.


      Balance amount (42.85) can be used/deposited as per you and your father's wish .

      point wise answer is given below

      - Do I need to deposit this 70 lakh(selling value) or 45 lakhs(profit) in Capital Gains account?
      Only capital gain amount is required to be used to purchase new house and out of this only balance unused amount on 31.07.2013 is required to be deposited in CAGS

      - Can I keep money in my saving account and use it directly when purchasing any house.
      yes , you can but to answer given above.

      - If I am using my saving account to keep this money and use it as per under construction payment plan... Can I keep it for 3 years.

      No ,used amount of capital gain is required to be deposited in CAGS before due date of return filing.

      - Can I purchase 2 flats using this money i.e. one in my dad and mine joint property and other in name of my wife and mine.
      yes , you can use balance amount as you wish (other than capital gain amount)

      - If I buy 2 properties using this money but sell one without any gain and use proceeds for first property...Am I laible for any tax ?
      property purchased to save capital gain amount can not be sold
      before three year .

      However property purchased from balance amount (other than capital gain amount) can be sold and you are liable to short term capital gain .

      Delete
  46. i sold my house(actual my dad house)he died intestate, rs. 10 lakhs,if i can buy one flat within 1 year.can i pay capial gain tax?

    ReplyDelete
  47. Dear Raja Babu,
    If I donate a property to an institution as charity (without receiving any money), do I have to pay any tax ?

    ReplyDelete
  48. Sir

    The unutilized portion in Capital Gains a/c is taxable after expiry of the time allowed. My query is how do you declare this in your tax returns i.e. under which head and how? For e.g. though it is to be taxed as Capital Gains, the LTCG schedule will be required to be filled, so do you put sale price, cost etc..? Hope I am clear.

    ReplyDelete
  49. Hi,
    We have got 15 lakh rupees from sale of old ancestral property and 45 lakh from sale of agricultural land (three brothers - the property is divided). Each indiviual thus has a capital gain of 20 lakh. To avoid long term capital gain of 20% as tax, what are the options that can be explored if each individual brother has his own home.
    Pl reply.

    ReplyDelete
    Replies
    1. sale price and capital gain is not the same thing ,you have to reduce cost price from the sale price . if the land is ancestral then you should indexed market value as on 01.04.1981 multi it with 8.52 .the

      further if land is agriculture rural land then there is no tax on it . if it is urban agriculture land then you have option to invest the amount in agriculture land ,new house or capital gain bond.

      it is clarified that you can buy new house even though you have already another house to save capital gain ''

      so you have three option
      54B(agriculture land only)
      54EC
      54F

      Delete
  50. I have sold a flat on 26/06/2012 after owning it for more than 5 years. I wanted to invest the gain in 54EC Capital Gain Bonds of REC or NHAI to save Long Term Capital Gain Tax. But the prospectus of these bonds says that the bonds would be alloted only on the last day of each month. If I pay the money before 26/12/2012 (completion of 6 months from the date of sale of my flat), but the bonds are alloted on 31/12/2012, will I be able to save LTCG Tax ?

    ReplyDelete
    Replies
    1. In our view 54EC available to you even if bonds are issued on last day of the month. So in our opinion investment date /deposit date is valid

      Delete
  51. dear sir
    we have sold 2 plots. 1. as on 23-06-2012
    2. as on 25-08-2012
    we have received demand draft for sale proceeds and deposited in SBI. and subsequently withdrawn and used for personal purpose. on 1st one

    On 2nd one, Demand draft received and deposited in a co-operative Bank which is registered as per co-operative societies act.

    my query:
    1. i want to get exempt from long term capital gain on entire 2 plots by purchasing of a flat.whether i have to invest net sale consideration or long term capital gain.

    2. builder has agreed to reduce the price, if i pay the entire amount now. and possession of flat is given after 14 months.can i give lump sum amount now from giving cheque of co-operative bank to get exemption.

    3. or shall i transfered from co-operative bank to capital gain account scheme before 31st July 2013 and give from this at stage wise.

    ReplyDelete
  52. Hi Sir,
    I have found the 5 yr old bulding its around the cost is 55lakhs and i will go for 42 lakhs home loan out of 55lakhs. House owner have 7 lakh home loan and how he will get the tax benefit from that amount (he will open any capital gain account) and he have to plan to purchange other property some other place. Please advice to me how we can proceeds with this.
    Thanks
    ESR

    ReplyDelete
  53. dear sir,
    i have been gifted one property by my father last year and unfortunately he passed away..i want to sell this property
    1.how can i save capital gain?
    2.is this capital gain be treated as short term or long term?
    3. can i purchase two property by selling this property?

    ReplyDelete
    Replies
    1. pls provide following information.

      1.when your father has acquired this property.
      2.what is the nature of property like residential house,plot ,commercial property etc.

      Delete
  54. Can i use the funds in capital gains account scheme to pay off my home loan

    ReplyDelete
    Replies
    1. pls ask query in detail,with full facts

      Delete
    2. I have sold my house in Nov 2010 and deposited the capital gains of 30 lakh into a capital gains term deposit before Mar 2011. I took a home loan for 45 lakh for purchasing another property around June 2010. Now I want to pay off the home loan with the funds in the capital gains deposit. Is this allowed as per the capital gains account terms?

      Delete
  55. I have an open plot and the sale is likely to take place in February 2013. If i do not opt do deposit the sale amount in Capital Gains A/C, within how much time should i re-invest the amount in the purchase of another property, so that I get the deduction from Long-Term Capital Gain?

    ReplyDelete
    Replies
    1. You have to deposit unused amount by return filing date ie, 31st july ,2013

      Delete
  56. One query about CGAS. Is the capital gains amount to be invested in this account, computed after indexing the cost of acquisition of the asset or prior to it? For e.g. if cost of acquisition is 8 lakhs and sale proceeds are 25 lakhs, the LTCG without indexation would be 17 lakhs.
    Now if the acquisition cost after indexation is 12 lakhs, then the LTCG post indexation would be 13 lakhs.

    So, which of the two LTCG amounts - 17 or 13 - should be invested in CGAS? Thanks in advance for your clarification..!

    ReplyDelete
  57. We sold our property in Feb 2011. With part proceeds we bought a house in April 2011. The balance amount was Rs 15 lac. Since we couldn't find another property we deposited this amount in SBI capital gain account in Aug 2011. I have still not found a ready construction property to invest this amount. 2 questions
    1. Is it ok to invest this in an under construction property for which i will get possesion in 2 years?
    2. If i decide to withdraw this amount from the bank for my personal use, do i have to submit any NOC from the IT dept?
    Please guide me on this

    ReplyDelete
  58. (1) yes you can invest in under construction property ,but it should be completed with in 3 years i.e up to Feb,2014
    (2)yes you have to provide detail

    ReplyDelete
  59. hi
    If the amount received from the property sold is transfered to CGAS to purhcase the house in next two years and if the person dies ,can the nominee purchase the house or u have to pay the TAX .

    ReplyDelete
    Replies
    1. Nominee can withdraw money and can use as he wish as amount is not taxable in his hand no need to buy any house .this is as per circular 743 dated 6.5.96



      Circular No
      :
      743
      Date of Issue
      :
      6.5.1996
      Section(s) Referred
      :
      54 , 54F
      Statute
      :
      Income-Tax Act


      Sub: Taxability of unutilised deposit under the Capital Gains Accounts Scheme, 1988 in the hands of the legal heirs of the assessee
      1. Under sections 54, 54B, 54D, 54F and 54G of the Income-tax Act, 1961, capital gain is not chargeable to tax if the amount of capital gain or net consideration has been utilised for specified purposes by the assessee within the stipulated period laid down in the relevant section. These provisions also provide for the deposit in specified Banks, etc., of the amount of capital gain which is not utilised by the assessee for the acquisition of new assets before the date of furnishing the return of income under section 139(1). The amount of capital gain already utilised for the acquisition/construction of new asset together with amount deposited is deemed to be the cost of new asset and, consequently, this amount is not chargeable to capital gain in the year of transfer of asset. The provisions of sections 54, 54B, 54D, 54F and 54G further provide that if the amount deposited is not utilised wholly or partly for the prescribed purposes, within the period specified, the amount not so utilised shall be charged under section 45 as the income of the financial year in which the period of two/three years (as prescribed in the relevant section) from the date of transfer of the original asset expires.
      2. A question has been raised regarding the taxability of the unutilised deposit amount in the case of an individual who dies before the expiry of the stipulated period.
      3. The matter has been considered by the Board and it is clarified that in such cases the said amount cannot be taxed in the hands of the deceased. This amount is not taxable in the hands of legal heirs also as the unutilised portion of the deposit does not partake the character of income in their hands but is only a part of the estate devolving upon them.
      Sd/-
      Mrs. Nishi Singh
      Secretary
      CBDT
      [F. No. 225/266/95-ITA-II, dt. 06-05-1996 from CBDT, New Delhi]

      Delete
  60. Hi
    We have sold our house and mother wants to invest the same in new house to save TAX. I would like to take loan from bank and purchase the house jointly . In this case can my mother have second name and I have first name in agreement.

    ReplyDelete
    Replies
    1. yes ,you should specify share of both the parties specifically

      Delete
  61. Dear Sir,

    I have sold a long term asset and purchased a residential house immediately for the equivalent value now after two years i wish to convert this house to commercial use without transfering or selling the house to other parties, will i loose my eligibility under sec 54 of the capital gains.

    ReplyDelete
    Replies
    1. No clear rule available in this regard,so we can not comment

      Delete
  62. Sir
    My father has a house in Ahmedabad constructed in 1954. We are four brothers . After expiry of my father in 1993 the house was transferred in name of my mother and four brothers. Now my mother is also expired in May 2012 and it is transferred in name of four brothers jointly. Now we all have decided to sold the house and the amount will be distributed to us in four equal parts. From which base year the capital gain tax will be accounted either from 1993 . 2012 or before that . The basic value of which year should be taken . If I invest in Capital Gain Tax Bond and pay the tax on interest then after how much period I can withdraw the said amount and at that time shall I have to pay the Capital Gain Tax . Can I purchase the property in joint name First my name and second my son or daughter's name. Can I distribute the amount in two properties Thanks. Can you give me reply on my mail

    ReplyDelete
    Replies
    1. How I can given reply on email ,when the same is not provided ?
      However point wise answer is given below.
      1.Base year 1981-82 ,and you should take value of house as on 01.04.1981 (market value or cost which ever is higher)
      2. Then you have to calculate index value
      Value as per one X 852/100
      3. take sale price minus selling exp-indexed value as per 2 above .This will be capital gain on sale of house.
      4. Now calculate your share (1/4) from capital gain.
      5.You can invest the capital gain amount(not net proceed) in capital gain bond for 3 years and on maturity no tax will be payable on capital gain.
      6 or you can purchase new house on your own name only with capital gain amount.
      7. You should buy single property to avoid any confusion

      Delete
    2. Sir
      My email address is
      mehtamanmohan@hotmail.com
      Please reply on my mail
      Thanks
      M N Mehta

      Delete
    3. Answer is already given above ,no need of mail id now.You can comment if any clarification required

      Delete
    4. Sir
      We are four brothers sold a property of my father after his and my mother's death. I have follwoing questions
      1. The amount will be divided in four parts. Shall we take cheque in each name of four brothers or joint name . We have opened joint account for this transaction .Can we take one cheque and then devide in 4 equal parts.
      2. If I purchase an house/flat and the value is less then what I get from above Can I invest remaining amount in Capital Gains Account Scheme
      3. The complete transaction and getting money from above transaction of selling my father's house will take two - three months. Can I purchase flat at present or shall I have to purchase after getting above money only. At present I saw a good flat and I want to purchase itAt present can I purchase from my fund and then I transfer above amount and show that I have purchase flat

      Delete
    5. Please clarify the nature of property
      A) residential house
      B)not a residential house

      Delete
  63. In case if I am getting money from more than one deeds of sale of properties within a span of 2 years, can I use the same account (CGAS)to deposit the funds in it multiple times? If yes how the track of timespan (2/3 years) per deposit is kept?

    ReplyDelete
  64. Dear Sir..We sold out property and deposited 50lakh into CGA in Jan 2012. We now (Jan 2013) have found an aparment for 70lakh which will be ready sometime in 2015. We can pay full 70lakh (55lakh from CGA) now itself and register the apartment. Will be still be paying capital gain tax as the apartment will be ready to occupy only in 2015?. please clarify..thanks

    ReplyDelete
    Replies
    1. yes , you have to pay capital gain tax as the house is not going to be completed with in prescribed time

      Delete
    2. Sir,
      Thanks for your reply. I am going to get money from a property deal in 5 installments spread across 3.5 years. I am planning to re-invest the amount in one property in construction so that I can pay in installments my questions are
      1. Is it possible to invest in this fashion w/o attracting tax?
      2. Since it is crossing 3 year limit from the 1st payment I receive from the deal do I have to forgo the last installment?
      3.Can I combine money that I may get from other property deal to buy the same property (within the acceptable time limit)?
      4. Can I combine money that my wife will get from other property deal to buy the same property?

      Delete
  65. Dear Mr. Raja Babu,
    I was an NRI and purchased a land in my mothers name in march 2010. I am planning to sell it now and use it for buying a flat. The flat is already identified. Can i directly get the amount from purchase of the land in my account and buy the flat? Will this be clarified as NRI money? How can i use the money for the flat? I will be buying a flat for 50 lacs. The money from the land is only 20 lacs. Rest 30 lacs i will be going for loan.

    ReplyDelete
  66. Dear Mr.Raja Babu,

    I sold a property in Jan 2013 thereby gaining Rs.10 Lacs as Long Term Capital Gains.

    In the year 2011 i had booked another flat and the registration was done on the same year. The flat will be ready for possession by March 2013 and i have about Rs.15 Lacs pending to pay to the builder. Can i claim deduction u/s 54 on this payment against my Capital gains of Rs.10 Lacs?

    ReplyDelete
    Replies
    1. In my view ,yes you can claim deduction as the construction of the house is to be completed after sale of old property.

      Further if property sold is not a residential house then you must not have more than one house other than new one.

      Delete
    2. Thanks Mr.Raja Babu.

      Delete
  67. HI

    My father died in 2009 without will . After that we 3 brothers and 1 sister thru affidivate transfered the name in our mothers name. On the society share certificate , the name is of my mother.
    After 3 years we sold the flat and received cheque in my mothers name.
    Now we are going to distribute the amount equaly in 5 parts.
    1-mother , 1 sister , 3 brothers.
    Now who will pay the tax , individually or mother has to pay the tax and then pay the money.
    2 bothers want to invest in house and 1 brother and 1 sister doesnt want to invest any where.

    ReplyDelete
  68. i have sold a property on 15th Feb 2013 for rupees 40 lac possession of property given. the said property is a residential house came from will of my grand mother which was originally bought for rupees 50000/-, construction done for five lac in 1985. the sale proceed are rupees 25 lac received on 15th feb2013 and i have also paid for registry charges which was 2,50,000 thousand rupees mentioned in registered sale deed. rupees fifteen lac received via pdc for 5 lac on 15th April 2015 and 10 lac on 15th Nov 2015 mentioned in registered sale deed.

    when will capital gain arise and at what amount?

    ReplyDelete
  69. I have 2 properties purchased at different time taking home loan.
    I have re payed back balance home loan amount (Rs. 5,50,000/-) for the 1st one(purchased in September 2009)in August 2012. Now I'm selling the 1st flat with a capital gain of Rs. 7,00,000/- (taking CII into consideration). WIll LTCG amount be adjusted with the re payment of load amount?
    Also, if I purchase another property investing all of the LTCG, and then sale the new property again after 3 years, what will be the tax implication?

    Rgds,
    Rajat

    ReplyDelete
  70. very informative thread ...Thanks to Admin

    ReplyDelete
  71. In which banks CGAS opened is possible and convenient

    ReplyDelete
  72. Thanks for sharing this information about Capital Accounts Collection. Because I didn't even know if for what is that. But in your article, I can now understand about this kind of service. You may also found more information about capital accounts here.

    ReplyDelete
  73. Hello Sir,

    I sold a property for 60 lacs last week .The buyer deposited the amount in my account using demand draft .Now its in my savings account.i am purchasing a flat by next month .(april 2013)

    1) I need to transfer the amount immd to the cgas account?
    2) or how long(maximum) i can keep the money in my savings account?
    3) my purchase of property on april 2013 is for 40 lakhs. can i purchase another property for 20 lakhs to avoid the long term capital gain tax?

    4) or else i need to pay tax for the remaining 20 lakhs?

    ReplyDelete
    Replies
    1. Hi Saran, I have a similar situation. what did u do?

      Delete
    2. Dear saran

      what was property sold ( We suppose residential house)

      If property sold is residential house than first you have to calculate capital gain amount.

      in you case property sold is of 60 lakh but what is capital gain in this transaction . I suppose it was 35 lakh .

      so with above assumptions,you should use minimum 35 lakh in new property .As you have already purchased new house of 40 lakh so balance 20 lakh is not required to be deposited in CGAS and can be used else where according to your wish

      if any doubt then ask query in detail

      Delete
  74. Hi,
    We had Capital gain in May 10 and the funds were deposited into special account with a bank, kindly advice on the below:-

    1. What are the applicable timelines for purchase of Flat/Construction in existing plot?
    2. whether such new property can be bought to avail Homeloan & Capital gain benefits through joint ownership in specific ratio.

    ReplyDelete
  75. I brought a flat in 2007 from builder for 40 L and took loan of 36 L -- now catch is "as per "sale deed", property is registered for 16 L". I sold it in Dec-12 for 60 L and paid 32 L for loan outstanding and balance 28 L deposited into my SBI saving account.

    Now question over here is, do I need to use 40 L or 16 L for calculation of capital gain calculation ?

    ReplyDelete
  76. Dear Sir,
    I am staying in house constructed in 1924 by my father. Now we are reconstructing it and we (my four brothers + me)five are getting equal shares. Now since I am 81 year old and wish to have cash consideration instead of new flat builder (redeveloper) has agreed to pay me INR 60 lac.Will it attract Captial Gain and if yes can you plz guide me on how to calculate it? Mrs.D.

    ReplyDelete
  77. We Sold our flat for 37Lacs in June 2013 (purchased for 20Lacs in March 2008)
    using the capital gain calculator, indexed purchase price is around 32Lacs.
    we booked a flat which is under construction in May 2013(one month before sale of our flat) and paid 6L as booking amount.
    do we still have to pay capital gain tax?
    please let me know

    ReplyDelete
    Replies
    1. Booking of flat is a agreement for right to purchase the flat not actual purchase .

      however ,In current financial year no tax is payable as you have used the amount to construct the new house .

      but, if new flat is not constructed within 3 years from date of transfer of old house i.e June 2016 then you have to pay tax on balance amount of capital gain of 5 lakh (37-32)

      Delete
  78. I sold a plot for 50lacs on 15apr12. I got into a sale agreement with a builder on 15may12 to buy a plot for 90lacs and gave him 50lacs as advance with remaining 40lacs to be paid at the time of registration. As this plot is a unreleased site, it cannot be registered till the layout is developed and release order obtained from Authorities. Development is going slow. As I have already given the developer 50lacs, I am not planning to open CGAS account. There is a risk of plot not getting registered on my name and complete building a house by 14apr15.
    I am planning to claim exemption under section 54f. If the plot is not getting registered on my name by this year end, I am planning to buy a ready to move in apartment early next year.
    Will this be an issue as technically I would have invested in apartment after 31jul13 and didn't open CGAS account.
    Are there any case laws favouring assesse in these kind of situations.

    ReplyDelete
    Replies
    1. yes, you should deposit money in CGAS .Further you should inform us the the capital gain amount on sale of plot .

      suppose the capital gain amount is 10 lakh then it is better to deposit 2 lakh tax then investing huge amount in haste where the chances of loosing money is more than tax outgo,

      further you can avail benefit under 54EC also by investing only capital gain.

      Delete
  79. I have sold a flat in February 2103. The Capital Gain after indexation is around 25 lacs. I intend to buy a flat within the next 12 months. have not finalized a property as yet. I was not aware of keeping this 25 lacs in CGAS. Now we have also passed the last day of return filling. Do i have any options to save taxon capital gain.

    ReplyDelete
    Replies
    1. last date now extended to 05/08/2013 , you should deposit the amount in CAGS on Monday.

      Further there are case laws in favour of assessee ,where court has allowed time up to end of assessment year

      Delete
  80. Thanks Rak KUMARI for the reply. Can CAGS be opened in a private bank like ICICI as well.

    ReplyDelete
    Replies
    1. As per our knowledge/information , No , but you can confirm from nearest bank branch.

      Delete
  81. How can I make a partial withdrawal from account type A for personal reasons if i am willing to pay cg tax on it? Pl reply to raghuvirp09@gmail.com

    ReplyDelete
    Replies
    1. you can withdraw without any reason

      Delete
  82. Dear Raja Sir,

    I sold my flat on April 2013 for 43Lakh, which is purchased in the year 2005 for 4Lakh. Please tell me how much my Capital Gain?

    The 43Lakh sale deed amount is deposited in my SB account. I purchased my new flat on August'13, which is under construction and will be completed by Feb 2015. The sale deed agreement registration formalities also completed.

    Now I already paid 28Lakhs to the builder from my sale deed amount 43lakh from my SB account. And the remaining 13Lakh also I will pay by this month.

    My question is: Will I have to do my income tax file return for this capital gain for the year 2013-14 by July 2015? If so, what are the documents I have to support for that? I am a NRI and I will be appreciated your kind reply.

    ReplyDelete
  83. Sale price=4300000
    Calculation of Total indexed cost Amount Sale Index purchase index Indexed cost
    Indexed Cost of Purchase 400000X939/497= 755734
    capital gain=43-7.56=35.44 Lakh

    However as you have already invested 28 lakh in new house and balance amount is to be paid in this month .So you are eligible for exemption u/s 54 of the income tax .

    So you income calculation will be as under
    Capital Gain from sale =35.44
    Less :exempted under section 54 (investment in new flat) subject to maximum capital gain amount=35.44
    Net taxable capital gain =NIL

    Yes as per present rules ,you have to file income tax return .further return is required to be filed on self declaration basis and nothing is to be attached with the return .You may file online also.Further date is July 2014 not july 2015 for the year 2013-14



    ReplyDelete
    Replies
    1. Dear Raja Sir,

      Thank you very much and I highly appreciated your prompt reply. I do agree that July 2014 is my date of file return.

      Delete
    2. Dear Raja Sir,

      I have one doubt. I have transferred 28Lakh through RTGS from bank itself to the Builder. Now I am out of India. Can I issue a cheque of 13 Lakh to builder from my SB account? I read somewhere that cheques are not acceptable from the Capital Gain money? Is this correct? Please clarify. Thanks.

      Delete
    3. As far as Income tax is concerned there is no such restriction on issue of cheque to builder.However as you are NRI you should convert your SB account to NRI account. For more details you should contact your bank branch

      Delete
  84. Dear mr raja i sold off a flat in Jan 2011
    I had earlier purchased two flats in Dec 2010 on the same date
    Both flats were completed and capital gains paid off by Dec 2012
    My question is
    (i) I had commenced pay ing off from my existing HDFC bank ac before July 2011 i.e. date of filing return, have i erred by not opening a CAGS ac?
    (ii) can i show money paid fr both flats fr capital gains exemption or only one flat

    ReplyDelete
    Replies
    1. Something is missing ion your query ,please ask in details with complete facts

      Delete
    2. i sold off a flat in Jan 2011 and incurred capital gains of rs 30 lac
      this money was deposited in my hdfc bank ac
      I had earlier purchased two flats in Dec 2010 on the same date for rs 35 lac each

      However, i had only spent rs 10 lac before 30 aug 2011 the due date for filing returns that year. i did not open a cgas ac and continued paying from the hdfc bank ac in instalments Both flats were completed and rs 30 lac capital gains utilised by Dec 2012
      the questions therefore are
      (i) will i have to pay taxes for rs 20 lac not spent prior 30 aug 2011 as the money was not placed in cgas ac
      (ii) can i show sum of money paid for both the flats for exemption or only from one flat

      Delete
  85. I have purchased a flat out of long term capital gain arising from sale of shares on 31st july 2011.
    My aged father-in-law age 81 years who was staying in another city sold his house on 17 july 2012 and shifted in the same house purchased by me. Part of the proceeds were invested in NHAI bonds in the same FY. The balance is deposited in CAGS account.
    Now he wants to purchase the same house from me. How can we make the agreement so that both of us can save on tax.

    ReplyDelete
    Replies
    1. You should not sale house within 3 years from purchase date i.e 31.07.2011+3 years =31.07.2014

      Further your father should buy new house before 17.07.2014 ,so technically if you sell house to your father before 31.07.2014 then you shall be liable for capital gain .

      So in my view there is possible way to deal and save tax for both of you.

      Delete
  86. I bought a flat in 2009 for Rs.19 Laksh. I sold it in Feburary 2014 for 26.5 Laksh. Deposited only 19Laksh in CGA account on Feburuary 2014. Remaining 7.5Laksh amount i have used it for closing a loan which i took in 2010 for purchasing another flat. Now I used Rupees 18,90,000 from CGA account for purchasing a plot. Remaining amount Rupees 10,000 still there for closure. My intention was to sell both of flats and buy a plot and construct a new house. From your thread, Now I could see only the capital gain amount 7.5Laksh can be put in CGA account. Is that true?
    The procedure which i followed is correct or not?
    Can I get exemption for the new purchase and construction?
    Please share your guidance on this. Will I be troubled from AO while closing this account?

    ReplyDelete
    Replies
    1. Yes , you are correct that only unused capital gain amount is to be deposited in CAGS account i.e also before the return filing date .further capital gain amount should be as under

      sale amount=26.5
      Indexed cost =19L X939/632=28.22 lakh
      Capital loss=1.72
      In your case there is no capital gain ,so no need to deposited any amount in CGAS and no need to buy new house as per capital gain or tax point of view but you can purchase as per your wish

      Delete
  87. Thanks Raja. But I have already deposited 19L in CAG account and taken Rs. 18,90,000 for investing which is wrong. Bank officer also did not tell me that only capital gain 6.5L should be admitted in that account. Now if i go to Assessment officer, he may ask me why you have deposited wrong amount in that account. Then they may treat 19L as Capital gain.

    ReplyDelete
  88. sir i sold a plot of land on 2 april 2013 which was bought in 1995.the amount was deposited in sb account for a month.then it was used to buy a flat for my elder brother in august 2013.i am salaried individual and i have not informed my office about LTCG as they deduct my tax at source.please suggest what options do i have?thanks

    ReplyDelete