Reinvestment of LTCG out of sale of Inherited, Nonagricultural land - Timeline

I have sold a piece of Inherited Nonagricultural land on 30th September 2011. I want to invest the entire sales proceeds in buying a flat, which I have already identified, within June 2012. What is my Income Tax Liability?

  1. Do I have to initiate/complete the purchase during FY 2011-2012? Or will it be ok if I start and complete the purchase process within 1 year from the date of sale of my property?

  2. In this period, ie from April to June 2012, is it mandatory that I keep the money in Capital Gains Account Scheme in Nationalised Bnaks or the money can lie in my savings bank account without attracting any liability till I complete the purchase by June 2012?

  3. How will this amount be shown in my IT return for FY 2011-2012?

asked Mar 29 '12 at 12:26 by B N Lahiri 1112


As per section 54F, if cost of residential flat being bought is more than sale consideration of land, there won't be any income tax payable, Provided you are eligible for section 54F.

In case you own more than one residential house properties at the time of land sale, you would not be eligible for section 54F.

Possession for flat should be taken before end of two years from date of sale of land. But if this is not done before 31st July, 2012 (last date of income tax return filing) you must invest sale consideration into capital gain scheme account. Amount can be kept in normal saving bank account before opening capital gain scheme account.

You would need to show the amount into long term capital gains in ITR and claim tax benefit u/s 54F for same.

answered Mar 29 '12 at 14:16 by Pankaj Batra 5.2k320

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Asked: Mar 29 '12 at 12:26

Seen: 1,545 times

Last updated: Mar 29 '12 at 14:16