The transactions would come in the capital gain tax purview and the difference between the sale
consideration and the indexed cost of acquisition would be taxable long term
capital gain.
The long term capital gain tax arising from the transfer of plot could be saved u/s 54F if you invest the sale consideration for purchase of a residential house property/flat.
Time limit to Purchase the Property:
Exemption u/s 54F is available if the Assessee invests net sale consideration for purchase of a residential house property
The long term capital gain tax arising from the transfer of plot could be saved u/s 54F if you invest the sale consideration for purchase of a residential house property/flat.
Time limit to Purchase the Property:
Exemption u/s 54F is available if the Assessee invests net sale consideration for purchase of a residential house property
- within One year before or two years after the date of transfer; or
- constructs a residential house within a period of three years from the date of the transfer of the original house.
Scheme of
Deposits:
Although under section 54F, the taxpayer is allowed 2 years to purchase or 3 years for construction of the house property, but the capital gain on transfer of the original assets is taxable in the previous year in which the transfer took place. The return of income of that previous year is to be filed before the specified date i.e., due date. Hence, the tax payer will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.
To avoid the above situation, the Income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). The amount of net sale consideration, which is not utilized by the assessee for purchase or constructions of the new house before the due date of furnishing the return of income, need to be deposited by him/her under the Capital Gain Accounts Scheme, before the DUE DATE of furnishing the return. After Deposits, the amount already utilized by the assessee for purchase/ cnstructions of the new house, along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen. Later on, whenever you purchase the flat within a specified time slot, you can make the payment from the CGDAS.
Although under section 54F, the taxpayer is allowed 2 years to purchase or 3 years for construction of the house property, but the capital gain on transfer of the original assets is taxable in the previous year in which the transfer took place. The return of income of that previous year is to be filed before the specified date i.e., due date. Hence, the tax payer will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.
To avoid the above situation, the Income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS). The amount of net sale consideration, which is not utilized by the assessee for purchase or constructions of the new house before the due date of furnishing the return of income, need to be deposited by him/her under the Capital Gain Accounts Scheme, before the DUE DATE of furnishing the return. After Deposits, the amount already utilized by the assessee for purchase/ cnstructions of the new house, along with the amount so deposited, shall be eligible for exemption under section 54F in the year in which LTCG has arisen. Later on, whenever you purchase the flat within a specified time slot, you can make the payment from the CGDAS.
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