Long term capital gains tax

preethamk 1
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I have sold a plot in 2009 Dec for 15 laksh. Out of the proceeds, 10 Laksh I have invested in 2009 itself into a apartment which was being built. I was told by the builder that the pocession / regitsration will be done by 2011 Dec. But now the builder says its delayed.

  1. Since the apartment was being built, what is the number of years which I can wait for posession / registration for claiming the LTCG benefit? Is it 2 or 3 years?
  2. If the apartment registration is delayed because of the builder beyond 2 / 3 years, then what is my tax liability?
  3. Out of 15 Lakhs I gained, only 10 lakhs i invested, by when should I invest the rest of the amount for the tax beneift?
  4. If I dont pay additional 5 lakhs to builder, can I claim for partial amount (10 Lakhs) only for the LTCG?
possession-delay residential-plot long-term-gains capital-gains income-tax
1 Answers
  1. Under section 54F, new residential property should be in your name within two years of sale (by Dec 2011).
  2. If possession/registration is not done within two years, you would have to pay income tax on long term gains, that is 20% on LTCG.
  3. In case of a plot, to save tax fully, whole sale consideration amount had to be invested by Dec 2011.
  4. If you can get possession by Dec 2011, you can claim 10 lacs for tax benefit and pay income tax on remaining gain proportionally.

One issue I see is that you have not deposited sale consideration into capital gain account scheme by 31st July, 2010. If it was not done, your tax benefit unfortunately won't be applicable.

Pankaj Batra5212
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