Question on Capital Gain tax

Dear sir,

I have sold a plot and got a chains of 90L. Since I owe two residential flats and not invented in bonds, I will have to pay the tax on the gains. Now I intend to sell one of the residential flat(which is more than three years old) and expecting a gain of 30L. Do i need to pay the tax on this gain of 30L or I can invest in buying another residential so that I don't have to pay the gain gains. Please clarify.

asked Jan 09 '12 at 18:14 by Srihari 165711


If you sell a residential flat after three years of ownership, you can save income tax by buying/constructing another residential house property u/s 54. As your gain on flat is 30 lakh, you can buy/construct another property for amount more than 30 lakh, to save tax fully.

answered Jan 09 '12 at 20:46 by pankaj 5.2k320

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Thanks for the clarification. Does this mean, since i have already sold the plot in July 2011, should i have to make sure I sell the flat before 31 march 2012 to save the whole income tax arising from plot and flat sale both. Please clarify as aim not aware of this benefit. Your quick response will make me to act immediately. Regards
(Jan 10 '12 at 14:29) Srihari
Sorry, another question. By when I should put the sale consideration into capital gain account scheme as i have currently put this amount in FD for shorter period. Second, by when I should invest in purchasing another residential property. I mean what is the time frame. Please clarify
(Jan 10 '12 at 14:33) Srihari
Hi Pankaj, I am confused with your following reply and what is mentioned in the article: "One more interesting point here is taxation of gains on plot sale after you sell a residential flat. Once you sell one of your flat, your owned residential property count becomes one and you are eligible to save tax u/s 54F for gains from plot sale." But in your article you mentioned that exemption is not there - If the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset.So even if he sells the flat later, he still owned the flat when he sold the land, so how would he get the exemption. I am referring to the following link and the following text in that link. http://www.pankajbatra.com/india/how-to-save-capital-gains-tax-ltcg-when-selling-land-plot/#ixzz1j52Avf69 "However, the capital gains exemption enumerated in (a) & (b) above is subject to the some conditions. The benefits as discussed shall not be available if: If the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset."
(Jan 10 '12 at 23:55) Amitks
Sorry for creating confusion and thanks for correcting it. I completely forgot the original asset clause while commenting.
(Jan 11 '12 at 13:55) pankaj
Hello Pankaj Thank you for your comments. Please correct my understanding and clarify the second point. That means i have to pay the tax on the capital gains that i have gained by selling the plot and have no way to avoid the tax (partially) As mentioned earlier, I have another two residential flats One residential flat (aim the sole owner) ` - Another residential flat (myself and my wife are the joint owners) Now aim planning to sell redidential flat in march 2012 at 60L( where myself and my wife are joint owners). Bought it at 30L in Jan 2009. Can I use these gains in buying another residential flat jointly without paying the capital tax in 2013. Please confirm. Regards
(Jan 21 '12 at 23:55) Srihari
You would have to pay income tax on gains from plot sale if you have not invested in capital gain bonds too within six months of sale. Else there is no way to avoid it now. Long term gain from selling residential flat for 60L would be around 19.5 lakh (see below computation). Purchase Year = 2008-09, Purchase Cost = 3000000, Cost Inflation Index (CII) for purchase year = 582 Sale Year = 2011-12, Selling price = 6000000, CII for sale year = 785 Indexed Purchase price = 3000000 x (785/582) = 4046392 Long term capital gain = 6000000 - 4046392 = 1953608
(Jan 23 '12 at 17:00) pankaj
You and your wife would have same share in this gain as in the property, so each of you would have to invest around 10 lakh each into a new residential property to save tax fully u/s 54. So if can buy joint property for atleast 19.6 lakh, or separate properties for around 10 lakh each. As section 54 applies in case of gain from sale of residential house property, there is no limit on number of such properties one can own in this clause.
(Jan 23 '12 at 17:00) pankaj
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Asked: Jan 09 '12 at 18:14

Seen: 1,896 times

Last updated: Jan 23 '12 at 17:00