capital gains

I PURCHASED A RESI FLAT IN 2001 FOR RS 950000 PLUS 38000 STAMP DUTY.I SOLD THIS FLAT ON 11TH JULY 2011 FOR RS 3540000. I GAVE THIS MONEY TO MY SON AND DAUGTER IN LAW FOR SOME POURPOSE. NOW I HAVE RECEIVED THIS MONEY BACK. CAN I INVEST IN CAPITAL GAIN BONDS TO SAVE TAX. HOW MUCH MONEY WILL I HAVE TO INVEST. Also if i plan to buy another house, in how much time i have to buy to save capital gain.

asked Jan 02 '12 at 14:29 by ritesh071 1358

In future, please don't use All capital letters for question and subject.
(Jan 02 '12 at 17:54) Pankaj Batra

Investment in capital gain bonds have to be done within six months of sale, in order to save tax u/s 54EC. So if you invest 17.2 lakh into capital gain bonds before 11th Jan, 2012, no income tax would be payable.

Below is the capital gain and income tax computation:
Purchase Year = 2001-02, Purchase Cost = 988000, Cost Inflation Index (CII) for purchase year = 426
Sale Year = 2011-12, Selling price = 3540000, CII for sale year = 785
Indexed Purchase price = 988000 x (785/426) = 1820610
Long term capital gain = 3540000 - 1820610 = 1719390
Income tax on capital gain = 1719390 x 20% = 343878

If you want to buy another house to save tax, you need to buy it before end of two years from sale u/s 54.

answered Jan 02 '12 at 17:58 by Pankaj Batra 5.2k320

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Thank you for your advice. I already own a house jointly with my wife, son and daughter-in-law. Can i buy another house property to save capital gain.
(Jan 04 '12 at 12:29) ritesh071
As you sold a residential flat, section 54 is applicable. There is no limit on number of owned residential flats under this section. If you would have sold any other asset (land, commercial asset, gold etc) then section 54F would have been applicable. In that one cannot own more than two residential properties to claim benefit.
(Jan 04 '12 at 16:50) Pankaj Batra
Since i sold my flat in july 2011, i want to invest my capital gain before end of financial year i.e 31-3-2012. Can i purchse a residential flat from my son which is under contruction and its possession will be in 2013-14. Please advise.
(Feb 12 '12 at 10:40) ritesh071
I want to add that it is a residential appartment of DLF and registry will be done on possession i.e 2013-14.
(Feb 13 '12 at 09:57) ritesh071
Possession of new flat should be taken before July 2013 in order to claim tax benefit u/s 54. New property can be purchased from anyone, even from you son.
(Feb 16 '12 at 14:37) Pankaj Batra
If possession is not received within two years, section 54 won't apply in normal scenario.
(Feb 16 '12 at 23:09) Pankaj Batra
(Feb 16 '12 at 23:10) ritesh071
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Asked: Jan 02 '12 at 14:29

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Last updated: Feb 16 '12 at 23:11