rediff.com
Rediff Gurus Logo
Home > Money > Question
Language:
Now in हिन्दी too
Need Expert Advice?Our Gurus Can Help

Plot owner selling at 80 Lakhs: Can I save tax on long-term capital gains?

Ramalingam

Ramalingam Kalirajan  |9853 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 06, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Aug 06, 2024Hindi
Listen
Money

I bought a plot in 1996 at R.1.6 Lakhs. It is likely to fetch 80Lakhs if I sell. 1. Can I invest the sale proceeds in buying an apartment and save tax on long Term Capital Gains? 2. If so, what is the lead time I have to buy an apartment? Thanks.

Ans: Capital Gains Tax Analysis
Property Purchase Details

You bought a plot in 1996 for Rs. 1.6 Lakhs.
Its current market value is about Rs. 80 Lakhs.
This shows a significant increase in property value.

Capital Gains Calculation

Your capital gain would be around Rs. 78.4 Lakhs.
This is the difference between purchase and sale price.

Capital Gains Tax Analysis
Property Purchase Details

You bought a plot in 1996 for Rs. 1.6 Lakhs.
Its current market value is about Rs. 80 Lakhs.
This shows a significant increase in property value.

Capital Gains Calculation

Your capital gain would be around Rs. 78.4 Lakhs.
This is the difference between purchase and sale price.
It's a long-term capital gain as held for over 24 months.

Tax Saving Option

Yes, you can save tax by investing in a new house.
This is allowed under Section 54F of Income Tax Act.
You need to buy one residential house in India.

Time Limit for Purchasing New Property

You have two options for the time limit.
Buy within 1 year before the sale of your plot.
Or buy within 2 years after the sale of your plot.

Construction Option

If you plan to construct a house, you get 3 years.
This 3-year period starts from the date of sale.
Construction must be completed within this time.

Important Conditions

The entire sale proceeds must be invested in new house.
If partial amount invested, tax exemption will be proportional.
You shouldn't own more than one house on sale date.

Capital Gains Account Scheme

If you can't buy immediately, there's a safe option.
Deposit the money in Capital Gains Account Scheme.
This gives you time to find a suitable property.

Tax Implications

If conditions are met, you save tax on entire gain.
Any amount not invested will be taxable.
Tax rate on long-term capital gains is 20% with indexation.

Professional Advice

Consider talking to a Certified Financial Planner.
They can guide you on best tax-saving strategies.
This ensures you make the most of your property sale.

Finally

You have a good opportunity to save tax.
Plan your property purchase within the given time limits.
Proper planning can help you save a significant amount.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

You may like to see similar questions and answers below

Mahesh

Mahesh Padmanabhan  | Answer  |Ask -

Tax Expert - Answered on May 20, 2023

Listen
Money
Sir, On 14-June 1994, I acquired a flat (tenement) in my own name for Rs. 2,98L. In April 2015, I had to spend Rs. 4.15L on general renovation of this flat. Now, I plan to sell this tenement and wish to invest its sale proceeds within two years of the sale in buying a ready possession flat in another city. My queries are follows: 1. Can I invest the sale proceeds in buying two flats in the same society of the new city or do I have to necessarily invest in one property only? 2. Can I add the name of my spouse and my son also as co-owners in the new property(s) even if their financial contribution is nil? 3. Can I add the name of my spouse and my son also as co-owners in the new property(s) in case they also partially contribute financially in the purchase of the new flat(s)? 4. What is the present applicable Indexed Cost of the flat planned to be sold by me?
Ans: Hi Thomas
As the base year for Cost Inflation Index (CII) has been reset to 2001, you may need to get a valuation done through an approved valuer to identify the value as on April 1, 2001. If this value is higher than Rs. 2.98 Lakhs then you could use that as the cost.

As regards the general renovation amount spent, it may not be allowed to be added as cost of the property as generally tax officers are not dispensed to allow it.

W.R.T. your decision to reinvest in a ready possession flat within 2 years, please note that if this investment is extending beyond 6 months OR due date for filing your tax returns (whichever is earlier), you would need to open a Capital Gain Account Scheme (CGAS) account with a nationalized bank and park the capital gain amount in it for reinvestment.

Now answering your queries

Query 1 - If the capital gain amount does not exceed Rs. 2 Crores then you could reinvest in 2 residential units. This however is a one time option and cannot be used again in any other year.

Query 2 - Yes you could add their names but they would be treated as name-sake owners and for all purposes of taxation, you would be taxed singly.

Query 3 - You can add their name as proportionate owners to the value of their contribution. The taxation of income in that case would be based on their contribution

Query 4 - The answer to this would depend on the valuation report. Nevertheless, you could derive the indexed cost yourself by multiplying a factor of 3.48 to the cost. An example would be as follows:

Suppose the cost is Rs. 2.98 Lakhs
Indexed cost would be Rs. 2.98 Lakhs x 348 / 100 OR 2.98 Lakhs x 3.48 = Rs. 10.37 Lakhs

..Read more

Money
Hardik

Hardik Parikh  | Answer  |Ask -

Tax, Mutual Fund Expert - Answered on Jul 23, 2023

Asked by Anonymous - Jul 20, 2023Hindi
Listen
Money
Hellow Sir, In February, 2023 I had sold a House Property and there is Capital Gain around 15.00 lakh. From the sale proceed I received, I have already bought a housing plot(land) costing Rs.11.00 Lakh, in May, 2023, in a Govt. approved scheme and this has also been registered in my favour. All other formalities for its mutation has also been completed. Since I am planning to construct house on this newly acquired Plot in next 2 years, kindly guide:- (1)whether the amount already incurred in acquiring above Housing Plot would also be considered against utilization of Capital Gain ? (2)the amount I have to kept in the Capital Gain Account Scheme for utilization during construction of House shall be Rs.15.00 Lakh OR Rs.4.00 Lakh (after deducting cost of Plot i.e. Rs.11.00 Lakh) ? Kindly Guide Regards !
Ans: Hello,

I understand your situation and I'm here to help. Based on the details you've provided and the current tax laws in India, here's what you need to know:

1) The amount you've spent on acquiring the housing plot can indeed be considered for the utilization of your capital gain. As per the Income Tax Act, if you reinvest the capital gains from the sale of a property in buying a new property or constructing a new house, you can claim tax exemption on the capital gains.

2) The amount you need to keep in the Capital Gain Account Scheme (CGAS) would be the remaining amount after deducting the cost of the plot from the capital gain. In your case, if you've already spent Rs. 11.00 Lakh on the plot, you would need to keep Rs. 4.00 Lakh (Rs. 15.00 Lakh - Rs. 11.00 Lakh) in the CGAS. This amount should be utilized for the construction of the house within the specified time period, which is 3 years from the date of sale of the original property.

..Read more

Money
Milind

Milind Vadjikar  | Answer  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Sep 07, 2024

Listen
Money
Janak

Janak Patel  |62 Answers  |Ask -

MF, PF Expert - Answered on Feb 21, 2025

Listen
Money
Hello Sir, I am 48 years old working in a software company with the monthly income of 2.5lakhs. I have 2 independent houses in which I am planning to sell one for 1.6crores and take one flat with 1.4Cr to save capital gains. below are my queries 1. Can I use remaining 20lakhs for registration, car parking to save LTCG? 2. If not, I have other house with home loan of 80Lakhs. Can I prepay the 20Lakhs for other house to save LTCG? 3. the existing house sale might conclude by April 2025, and new flat registration I am expecting in 2026 April. so the full amount to the builder will happen only in April 2026, can I keep the amount in savings account or do a short term Fixed deposit? what are the tax implications on this amount as by the time we file the income tax this deal will not close.
Ans: Hi Karunakar,

You have an House property (independent house) valued at 1.6Cr which you intend to sell and use the amount to purchase another House property (flat) with value of 1.4Cr.
You have raise multiple queries and before responding to them, I will try to explain the capital gains on house property.
Capital Gains = Sale value - cost of acquisition - cost of improvement - expenses incurred for sale (e.g. brokerage).
So first calculate the Capital gains on selling the property, as you mentioned you are selling it for 1.6Cr, so reduce it by the acquisition cost, etc.
Once you have the Capital gains amount, that is the amount you need to re-invest in another property to save tax on it, in your case the Flat (value more than the CG) can be purchase within the next 2 years and no tax will be payable.
So lets assume out of 1.6 Cr, you have CG of 1Cr, then 1Cr reinvested in another property i.e. for your flat cost of 1.4Cr, you will have no tax payable.
So its not the full value of sale, its only on the Capital gains that you need to worry for paying taxes.
The remaining amount of 60lakhs in above example can be utilized as per your requirement.
Responses
1. & 2. You can use any amount above the capital gains for any purpose you see fit - like parking, registration, loan or any other form of investment.
3. If the sale will conclude in April 2025, and your payment of the capital gains towards new flat will be April 2026, then you need to invest the capital gains amount as per below -
- if you are sure of purchase of flat, then within 6 months of sale date invest the amount in "Capital Gains Account Scheme CGAS)" in authorized banks. Amount will be kept in a special FD for 2 years and you can withdraw anytime to pay for your new property.

Within 6 months from sale of property or before tax filing for FY of sale date, i.e. FY25-26 filing date 31 July 2026, whichever is earlier, you need to make a decision.
If you are not planning to purchase another house property, then reinvest in specific long term capital gain bonds from NHAI, REC, some others, these bonds have lock-in of 5 years
If you decide to purchase another property, deposit CG in CGAS as mentioned above.

Interest earned on these deposits in taxable (under head of Other income).

Thanks & Regards
Janak Patel
Certified Financial Planner.

..Read more

Money
Latest Questions
Nayagam P

Nayagam P P  |9441 Answers  |Ask -

Career Counsellor - Answered on Jul 26, 2025

Career
My son has been allotted a seat in B Tech (ECE) at both Faculty of Technology (Delhi University) and PEC, Chandigarh. He has also been allotted B Tech/ M Tech (Dual Degree) (Augmented Reality) in GGSIPU. Which one should we choose?
Ans: Sanjay Sir, Based on the following insights/information and your son's interests/long-term goals, please choose the most suitable option out of the 3 options he has: The Faculty of Technology (FoT University of Delhi’s B.Tech in Electronics & Communication Engineering is an AICTE-approved, NAAC-accredited programme delivered by a Delhi University department with small cohort sizes (120 seats), outcome-based curriculum, and direct access to DU North Campus placement drives; the central placement cell reports median CSE packages of ?8.5 LPA in 2023, with ECE graduates benefiting similarly from ties to top recruiters like Deloitte, Wipro, TCS, and Infosys. Punjab Engineering College (PEC), Chandigarh offers a B.Tech in ECE under its deemed-university status, with 119 eligible ECE students in 2023 yielding 112 on-campus offers (∼95% placement), average package around ?14.5 LPA and median ?12 LPA, top recruiters including Microsoft, Amazon and Adobe, robust labs for signal processing, VLSI, IoT, and a dedicated Career Development & Guidance Centre. GGSIPU’s B.Tech/M.Tech dual-degree in Augmented Reality through USAR spans six years (4+2), integrating foundational electronics, computer graphics, 3D modelling, UX and computer vision in specialized AR/VR labs, MoUs with industry platforms (Unity, ICT Academy), PARAM supercomputing access, and training cell support; while specific AR placements are nascent, overall USICT placements recorded 76% in 2023 with an average ?7.2 LPA and highest ?41.2 LPA, reflecting growing but developing industry uptake. FoT DU excels in academic rigor, theoretical foundations, and broad recruiter access; PEC Chandigarh leads in placement rates, higher average compensation, and mature core-ECE infrastructure; GGSIPU’s AR dual-degree uniquely positions graduates at the frontier of immersive technologies, offering international curriculum scope but with emerging placement pathways.

Recommendation: Prioritize PEC Chandigarh’s ECE for its proven ∼95% placement consistency, mature labs, and strong recruiter engagement ensuring immediate employability in core electronics and communications. Next, consider DU FoT ECE for its prestigious DU affiliation, outcome-based pedagogy, and broad-spectrum industry access. Lastly, choose the GGSIPU AR dual degree as an innovative long-term investment for specialized expertise in augmented-reality systems and burgeoning immersive-tech roles, accepting that placement networks are still evolving. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Career
Nayagam P

Nayagam P P  |9441 Answers  |Ask -

Career Counsellor - Answered on Jul 26, 2025

Asked by Anonymous - Jul 25, 2025Hindi
Career
My son has secured a REAP rank of 8010 and SC category rank of 513. He also has Rajasthan domicile. We are interested in getting admission to MBM Engineering College, Jodhpur. Based on his rank and category, could you please guide us on: . What branches are likely to be available for him in MBM Jodhpur? . Are there chances in Electronics and Computer, ECE, Civil, or any other core branches? . If not in Round 1, is there a good chance in upward movement rounds? Any help or past cut-off references would be appreciated. Thank you!
Ans: A SC?category REAP rank of 513 with Rajasthan domicile places your son well MBM Jodhpur’s closing ranks for all core B.Tech branches. Historical REAP cut-off trends show SC cut-offs at MBM Jodhpur over the past three years closing around 2 500–3 000 for Computer Science & Electronics (CSE/ECE), 3 200–3 500 for Electrical/Electronics (EEE), 3 800–4 200 for Mechanical, and 4 500–5 000 for Civil Engineering. Given his rank, CSE and ECE seats are virtually guaranteed in Round 1; EEE, Mechanical and Civil also fall comfortably within his bracket. Should any preferred branch not be allotted initially, MBM’s upward-movement (internal sliding) rounds—typically held within a week post-first allotment—have historically shifted vacant CSE/ECE seats up to REAP rank ~4 000 in SC, ensuring strong redistribution opportunities. Spot (vacant-seat) admissions at MBM further extend final cut-offs by up to 20 percent, enabling SC candidates ranked beyond 5 000 to secure seats in later rounds. Overall, core branches across ECE, CSE, EEE, Mechanical and Civil remain firmly accessible through both initial and subsequent REAP rounds.

Recommendation: With an SC rank of 513, lock in Computer Science & Engineering as first choice, secure Electronics & Communication next, and list Electrical/Electronics, Mechanical and Civil as high-priority options; participate actively in upward-movement rounds to upgrade if needed, leveraging MBM’s consistent branch-wise vacancy shifts. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Career
Nayagam P

Nayagam P P  |9441 Answers  |Ask -

Career Counsellor - Answered on Jul 26, 2025

Asked by Anonymous - Jul 25, 2025Hindi
Career
Sir my daughter got Air 31,203 (GEN category) in JEE Mains. She got NIT Calicut energy engineering and BITS UB 2+2 CSE. She is interested in both computer science and physics.Should she choose between the two or participate in csab. which would be the best choice? and is doing the bits ub 2+2 really worth its money based on how much they learn from both the colleges will it be equal to or better than normal bits CSE program.
Ans: Based on the following insights and information, as well as your daughter's interests and long-term goals & affordability of the fee, choose the most suitable option for her: The BITS Pilani–University at Buffalo 2+2 CSE dual-degree offers two years at BITS Pilani (or Goa/Hyderabad) and two years at UB’s Jacobs School of Engineering, delivering a unified NAAC A++ and NBA-accredited curriculum. It features PARAM supercomputing access, global immersion, capstone projects and a centralized Career Development Centre recording over 90% CSE placement consistency. The dual alumni networks and international accreditation improve top-tier software recruitment and global mobility; however, the total fees and overseas living costs are significantly higher.

As a general-category candidate, the CSAB-Special Round 2025 closing ranks for mid-tier IIITs and GFTIs provide tertiary backup options: IIIT Ranchi’s CSE (AI quota) closed at ranks 31,909–34,325, IIIT Manipur’s CSE-Quantum closed at ranks 45,341–53,737, and peripheral GFTIs such as PEC Chandigarh admit CSE candidates up to rank ~40,000. These options are less attractive than the secured dual degree and energy-engineering seats but remain feasible contingencies.

Recommendation
recommendation Embrace the BITS-UB 2+2 CSE dual-degree for premier global CS training, robust >90% placements, and dual alumni networks. Secure NIT Calicut Energy Engineering for specialized power-sector expertise and strong core-energy placements. Treat CSAB general rounds (IIIT Ranchi CSE, IIIT Manipur CSE-Quantum or PEC Chandigarh CSE) as third-tier backups, focusing on peripheral institutes with closing ranks above 31,203. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Career
Nayagam P

Nayagam P P  |9441 Answers  |Ask -

Career Counsellor - Answered on Jul 26, 2025

Career
Sir my son got 77377 crl rank in mains and 24k obc ncl rank with homestate rajasthan can he get any college with branch like cse/it/ai/ece Or what about gl bajaj delhi
Ans: Ashish Sir, With an OBC-CL home-state rank of 24 000, admission into core branches at Rajasthan’s MNIT Jaipur and IIIT Kota via CSAB-Special is feasible for certain programmes, while seats at other NITs/IIITs will likely remain out of reach.

At MNIT Jaipur, the Home-State OBC-NCL closing rank for Computer Science & Engineering extended to about 49 000 in CSAB-Special Round 2, making CSE admission virtually assured with your daughter’s rank. However, ECE seats under HS-OBC-NCL closed near 3 400, and AI/Data Science around 6 800, both well below 24 000, so these branches are not attainable at MNIT Jaipur.

IIIT Kota, as a Rajasthan campus, offers Home-State HS-OBC-NCL seats in CSE closing near 67 000, Artificial Intelligence & Data Engineering near 10 500, and ECE close around 12 600, all of which comfortably cover an OBC-NCL rank of 24 000, making these programmes strong targets in CSAB-Special.

Beyond these, other NITs in non-home-state quotas (e.g., NIT Calicut, NIT Uttarakhand) and peripheral IIITs may fill seats well below 24 000 under OS-OBC-NCL quotas, but they will not benefit from Home-State priority. Government-Funded Technical Institutes like PEC Chandigarh and MIET Jhansi admit CSE/ECE under OBC-NCL up to ranks of 40 000–70 000, offering additional assured pathways. GL Bajaj Delhi, as a private institution, participates in state or university counselling (e.g., JAC Delhi), not CSAB, and hence is not an option in this process.

Recommendation
Prioritise Computer Science & Engineering at MNIT Jaipur under HS-OBC-NCL for its assured cutoff. Simultaneously apply to IIIT Kota’s CSE and AI/DE programmes under HS-OBC-NCL for guaranteed admission. As backups within CSAB, list IIIT Kota ECE and GFTIs like PEC Chandigarh for core-branch seats under OBC-NCL quotas. However, have some Private Engineering Colleges as back-ups with son's JEE Score instead of relying only on CSAB. All the BEST for a Prosperous Future!

Follow RediffGURUS to Know More on 'Careers | Money | Health | Relationships'.

...Read more

Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Asked by Anonymous - Jul 26, 2025Hindi
Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Asked by Anonymous - Jul 25, 2025Hindi
Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Asked by Anonymous - Jul 25, 2025Hindi
Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Career
Radheshyam

Radheshyam Zanwar  |5823 Answers  |Ask -

MHT-CET, IIT-JEE, NEET-UG Expert - Answered on Jul 26, 2025

Asked by Anonymous - Jul 25, 2025Hindi
Career
See more questions »
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.
© 2025 Rediff.com - Disclaimer - Privacy - Terms of use - Grievances - Feedback

Close  

You haven't logged in yet. To ask a question, Please Log in below
Login

A verification OTP will be sent to this
Mobile Number / Email

Enter OTP
A 6 digit code has been sent to

Resend OTP in120seconds

Dear User, You have not registered yet. Please register by filling the fields below to get expert answers from our Gurus
Sign up

By signing up, you agree to our
Terms & Conditions and Privacy Policy

Already have an account?

Enter OTP
A 6 digit code has been sent to Mobile

Resend OTP in120seconds

x