LTCG Amt invest in Bank FD

Dear Pankaj, We have earned LTCG on sale of agriculture land. Now we have heard that we can put the LTCG amt earned in bank Fixed deposit for 6 month from the date of sale & there will be no income tax deduction on it & we can aldo earn the interest on the FD.

Please explain in detail that can we put the LTCG earned in a FD for six months without paying any taxes??

asked Apr 01 '12 at 00:02 by Sag 1344


In order to claim tax benefit on long term gain, either you have to buy residential house property or invest into capital gain bonds.

Under section 54EC: Investment in capital gain bonds can be done within six month of sale. So before investment into capital gain bonds, you can keep amount in fixed deposit as well, but interest earned on fixed deposit would be taxable as income from other sources. This interest would be added to your taxable income and taxed as per your slab rates.

Under section 54F: In case of investment into a residential house property, possession of new house should be taken within two years of sale, or if self constructed, construction should complete within three years from sale. In case this is not completed before last date of income tax return filing for financial year in which sale happened, amount has to be invested into capital gain scheme account before filing returns. So in case you sold land in Feb 2012, you need to invest amount into capital gain account before 31st July 2012. In the meantime, money can be invested into fixed deposits but interest would be taxable as per slab rates.

answered Apr 04 '12 at 11:29 by Pankaj Batra 5.2k320

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Asked: Apr 01 '12 at 00:02

Seen: 2,183 times

Last updated: Apr 04 '12 at 11:29