Long Term Capital Gains Waiver

Raam 1
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I purchased a residential flat in Delhi in Dec 2005 for Rs 50 lacs and sold it for Rs 200 lacs in Jan 2013. a) Will I be eligible for LTCG waiver if I purchase a plot and construct therupon within a period of 3 years of sale? b) Is there any upper limit which would be allowed for investment in land? Example - can it be Rs 150 lacs land and Rs 50 lacs in construction? c) Is there any time limit within which the land needs to be purchased or possession obtained to be eligible for LTCG waiver? d) Is the money to be deposited in a separate account within a specified period?

Thanks.

ltcg-tax house-construction long-term-capital-gains residential-property income-tax
1 Answers

Purchase Year = 2005-06, Purchase Cost = 5000000, Cost Inflation Index (CII) for purchase year = 497
Sale Year = 2012-13, Selling price = 20000000, CII for sale year = 852
Indexed Purchase price = 5000000 x (852/497) = 8571429
Long term capital gain = 20000000 - 8571429 = 11428571

Long term capital gains is around 1.15 crore. So u/s 54, if you buy/construct a new residential house property for an amount more than this gains, no income tax would be payable.

  1. If you buy a built-up flat/house, you will have to get possession for same within two years from sale. If you get house constructed yourself, completion should be done with three years from sale.
  2. There is no upper limit on plot/construction amount spent.
  3. In case possession/construction of new property is done before last date of income tax return filing (31st July 2013 in your case), no need to deposit gains into any special account. Else, gains would need to be deposited into capital gain scheme account.
Pankaj Batra5212
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