Basis of Calculation of Capital gain for real estate - Date of Registration or Date of Possession

kirti acharya 1
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Dear Sir,

Here are the bare facts of the case. I was allotted a plot of land by West Bengal Housing Board which I plan to sell in year 2013-14. I need advice re Capital Gain tax. 1. The facts about sale/purchase of the land: Date of Allotment of Plot: 25.07.2002 Date of Registration of Sale Deed: 28.4.2010 Date of Possession: 13.5.2013: I took possession after 3 years of registration, because I had shifted to Bangalore in mean time. I also paid a Guarding charge to the board to take care of property after Sale Deed was executed. Q.1 If I sell the land in 2013-14, will it be Short term Capital Gain or Long Term Capital gain? Q.2 Of the proceeds, if put 50% in REC bonds and with balance 50% or more, if I buy a residential flat, can I get exemption on 100% LTCG under sec 54 EC? I will put this amount also in a CAGS account, till I buy the flat. Q.3 The limit on REC/NHAI bond is Rs 50 Lakh. Is this limit applicable for Investment made in one financial year? Say, if I get a sale value of Rs 60 Lakhs paid to me in Dec 2013, can I invest Rs 50 Lakhs before March 2014 and balance 10 Lakhs after March 2014? Both the investments will be within 6 months of sale.

long-term-capital-gain section-54f registration-date possession-date section-54ec residential-plot
1 Answers

I think, you can safely consider sale deed date for capital gains computation. In some cases, it has been even taken as date of allotment after court cases.

  1. It would be long term gains, if sale deed date is considered.
  2. You can invest into capital gain bonds u/s 54EC and into residential house property u/s 54F to save income tax.
  3. Investment limit into capital gains bonds is Rs 50 lakhs per financial year. You can invest 50 lakhs each into two different financial years u/s 54EC, but investment has to be done within six months of sale. So you should plan sale of plot not before Oct 2013, so you can invest into capital gain bonds once in Oct-Mar and once in April 2014.
Pankaj Batra5212
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