Hi pankaj, i sold a plot on 31/5/2010. so to avoid tax what should i do. some says i should invest the whole amount to my another property in 2 years or construct a house in 3 years, please clarify.
1 Answers
If the plot is sold after keeping for atleast three years, it will be a long term gain.
In order to save income tax on long term capital gain, Under section 54F, you will have to purchase a new residential property (1 year before transfer or 2 years after transfer) or get a residential house constructed within 3 years from the date of transfer.
New investment should be equal or greater than the amount of Net consideration (selling price of plot). Also the person can hold only one house property other than the new exempted asset at time of buying new exempted property.
Also make sure that you don’t buy any other new house property within 1 year from the date of transfer or constructs a new house property from 3 years from date of transfer other than the exempted asset.
There is another way of saving tax, under Sec 54EC, you can save capital gains tax by investing in certain bonds but only if the gains are invested within six months of sale of the capital asset in bonds like National Highway Authority of India (NHAI) and Rural Electrification Corporation (REC). This has a ceiling of up to Rs 50 lakh per financial year.
thanks a lot pankaj
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