LTCG investment options

SharadaG 1
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Que(1)I got a Capital Gain of Rs.23,00,000/- by selling a Flat. Registration is done by the party who purchased a flat in the month of April 2012. Will this be considered as the date of selling for me?

Que(2)If answer to Que(1) is YES, Can I invest this amount in FD for one year i.e. till May2013 without getting taxed for this LTCG?

Que(3)I'm not planning to purchase any property now as I want to utilise this amount for my Kid's future. In such case, how can I best utilise the LTCG. I mean is there any option that I can invest in any kinds of Infrastructure bonds and forever get rid of Tax on LTCG? If the answer is YES, I want to know what are those bonds, what is the locking period, within how much period of selling the flat these bonds need to be purchased and how much is the annual rate of interest? Once, the locking period is over, can I get rid of LTCG and make use of this amount in opening FDs, etc.

Que(4)Since, I got LTCG of Rs.23,00,000/- from selling of a Flat, can I make use of this amount in purchasing a land of around Rs.10,00,000 and remaining amount of Rs.13,00,000 being utilised for constructing the house?

section-54ec capital-gain-bonds long-term-gains ltcg income-tax
1 Answers
  1. The day you handover property to buyer (possession date) would be assumed as date of sale. Generally transfer sale deed date is also accepted for same.
  2. You can invest this amount anywhere before 31th July 2013, without loosing tax benefit u/s 54.
  3. If you don’t want to purchase residential property and get tax benefit u/s 54, you need to invest capital gains into capital gains bonds u/s 54EC to ave tax. This must be done within six months of sale. Amount would be locked for three years. Rate of interest is 6% p.a. Interest would be taxable like normal income as per slab rates. After lock-in period, you can use amount wherever you want.
  4. Long term gains can be used to buy land and constructing house on it and get tax benefit u/s 54. House construction should be completed by three years time from date of sale.
Pankaj Batra5212
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