Saving Capital Gain Tax

dydilip 1
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Dear Batraji

I purchased a flat in 2001 in Mumbai for Rs.15.50 lcas, now want to sell and I hope to get Rs 100.00 lacs as per the market rate.

If, I purchase a flat within two years costing more than the actual "Long Term capital Gain " out of the above transaction then no tax has to be paid. ( Please correct me if this is not correct.)

But, if I dont want to purchase any flat/ house property then is there any scheme where i can invest the amount of actual Long term Capital Gain and save the entire tax.

Please guide.

residential-property long-term-gains section-54 income-tax
1 Answers

You would have around 70 lakh of long term capital gains from this transaction.

Under section if these gains are reinvested into a residential house property (possession of property should be received in two years time from sale or if construction is done self it should be done within three years), there won't be any income tax payable.

If you don't want to buy/construct a residential house property, you can still save income tax by investing capital gains amount into capital gain bonds u/s 54EC. Max investment in these bonds is 50 lakh per financial year. And amount must be invested within six months of sale.

If you sell flat between Apr-Oct and want to get benefit u/s 54EC, then it would be available only upto 50 lakh. Whereas say if you sell in Oct, there would be two financial years falling in next six months, which would help you to invest more than 50 lakh into capital gain bonds (50 lakh per year, thus makes total upto one crore investment).

Pankaj Batra5212
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