Hi, I am someone who dont know anything regarding tax, I have just started learning that. so please help me. My Question is, we bought a flat in year 2001 for 3.5 lacs, and in this coming march we are selling it for 8 lacs. On the other hand we are going to buy a plot in may worth 15 lacs ( where we are going to construct a house nxt year ). now I have learnt that a financial year starts from 1 april to 31 march, and somebody told me that if I sell my flat and bought a plot in the same financial year then i dont need to pay taxes on the money that i will be getting on selling my flat because I will be investing it in buying a plot. but now the confusion is, I am selling my flat in march and the financial year gets over and I am buying a plot in a new financial year ie may. So do i need to pay taxes, if yes then is there any way to avoid that ?
1 Answers
As you are selling a residential flat after keeping it for more than three years, income tax on capital gains arising due to same can be avoided under section 54 and 54EC.
Under Section 54, You can invest the capital gain amount again in buying another house (within a year of selling or within 2 years of transfer) or construct another house within 3 years of sale. Start/End of financial year does not matter unless you do investment within 6 months.
In case there is a delay in buying new property and you still want a deduction on the tax on your capital gain, you must invest whole amount in Capital Gains Scheme of Deposit Account, which can be opened in any public sector bank branch. But if this amount is not used for buying new house within three years, tax on long term capital gain have to be paid.
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