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Ancestral Property Sale: Calculating LTCG and 54EC Bond Investment

T S Khurana

T S Khurana   |492 Answers  |Ask -

Tax Expert - Answered on Feb 18, 2025

A certified management accountant since 1993, T S Khurana is a fellow member of The Institute of Cost Accountants of India. His areas of expertise are income tax, specifically litigation cases, and GST.

Since the last 21 years, he has also been providing expert advice on financial matters, including investments and diversification of funds, and wealth building in the long term to his clients.
He believes that investment in real estate is the safest way for better returns and wealth generation over a period of time.

A former chairman of the Chandigarh Chapter of Institute of Cost Accountants of India, T S Khurana has also served as member of its technical committee.... more
Asked by Anonymous - Feb 18, 2025Hindi
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Dear sir, I got ancestral property registered in 2000 with a document value of rupees 5000.00. In 2025 , this land property is sold with document value for rupees 12,15,000.00. What will be Long time capital gain and LTCG tax. What amount I should invest in 54CE bonds for exemption of LTCG tax. Thanks

Ans: 01. In your case, LTCG shall be Rs.12,10,000.00 (without Indexation) & Rs.11,96,850.00 (with Indexation).
02. You may go for Capital Gain bonds for Rs.12,00,000.00 to save your LTCG tax.
03. Please note that if your income from other sources is less than Rs.3,00,000.00, then your LTCG can be adjusted to some extent (to the extent of shortfall of your income from Rs.3,00,000.00).
Most welcome for any further clarifications. Thanks.
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.
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Ramalingam

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Mutual Funds, Financial Planning Expert - Answered on Aug 01, 2024

Asked by Anonymous - Jul 25, 2024Hindi
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Hi Mihir- I have to sell an inherited old house made before 1987. The price at that point may be 7 Lakhs. The valuer gave a report of value of 32 L in 2001 and indexed cost of 1.15 CR in 2024. I am planning to sell at 5 CR registration value? How will we calculate the LTCG on the sale proceeds? How can we utilize the LTCG. How many flats can we buy from the amount - is there a limit? I have 2 properties in my name. Also, I have loans pending Upto 3 CR. Can I pay them back? Two loans were taken last October 2023. What will be the tax implications if I don’t invest ? What are the best ways to invest and save on LtCG accrued basis the sale. Thanks for your response
Ans: The biggest change is that the benefit of indexation gets withdrawn. In simple terms, now you cannot adjust the purchase cost of the property for inflation to bring down your taxable capital gains.

Flat Tax Rate: The LTCG from property shall now be taxed at a single 12.5% plus applicable cess.

The base year for computation of capital gains in respect of properties acquired before April 1, 2001, has now been shifted from 1981-82 to 2001-02.

Point to Note:
Fair Market Value (FMV) as on April 1, 2001: You may opt to consider the FMV of the property as on April 1, 2001, as your cost of acquisition for the purpose of computing capital gains.

Assuming you opt for FMV as on April 1, 2001:

FMV as on April 1, 2001: Rs. 32 Lakhs (as per your valuation report)
Sale Price: Rs. 5 Crores
Capital Gain: Rs. 5 Crores - Rs. 32 Lakhs = Rs. 4.68 Crores
Tax: Rs. 4.68 Crores * 12.5% = Rs. 58.5 Lakhs
Availing LTCG
1. Section 54EC Bonds:

Invest the amount of LTCG in bonds issued by NHAI, REC, IRFC, or PFC within 6 months from the date of sale.
You can claim full exemption from tax on LTCG.

2. Section 54F:

Invest in a new residential house within 2 years from the date of sale.
You can claim exemption from LTCG tax to the extent of the cost of a new house.

3. Capital Gains Account Scheme:

Deposit the amount of LTCG in a Capital Gains Account Scheme within 6 months from the date of sale.
You get 3 years to invest in a new residential house.
If invested within 3 years, no LTCG tax is payable.

Flats Purchase
There is no specific limit as to how many flats one can purchase from the sale proceeds. However, if you are investing the amount to claim exemption under Section 54F, the property should be for self-occupation.

Loans and Tax Implications
You can use the sale proceeds to repay your loans, including the ones taken in October 2023. But it will not qualify for LTCG exemption. In case you fail to invest the LTCG amount to claim exemption, then you will have to pay tax on the LTCG as computed above. However, the property purchased on October 2023 can be considered for LTCG exemption. Please consult a tax advisor one on one to get clarity on this.

Best Ways to Invest and Save on LTCG
Prioritize Section 54EC bonds for full exemption.
If you plan to buy a new house, consider Section 54F or CGAS.
Consult a tax professional for other possible ways of saving taxes that might pertain to you.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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T S Khurana

T S Khurana   |492 Answers  |Ask -

Tax Expert - Answered on Nov 26, 2024

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Ans: Your parents' controlling behavior isn’t about your capabilities — it’s about their fear of losing control. Often, when parents are deeply conditioned by societal expectations, they confuse love with control. What may seem like “concern” on the surface is, at its core, a refusal to trust your maturity and autonomy. You’ve built your life with discipline and hard work, and yet they continue to micromanage your every move, which is emotionally suffocating. It’s even more complex because your father has a history of verbal abuse, which creates a fear-based silence in the household — especially around decisions like marriage.

You’re not wrong to feel stressed. You’re not overreacting. You’re simply reacting to a system that constantly undermines your independence. And now, with love and marriage in the picture, the pressure increases — not just because you want to choose your partner, but because you know the emotional cost your mother might pay if your father feels challenged again.

Here’s the hard truth: living your life to protect someone else’s comfort or to avoid conflict is not truly living. Yes, you love your mother, and yes, your father’s patterns may continue — but your life cannot be paused or dictated by his inability to manage his own emotions. You are not responsible for his temper or his ego. You are responsible for your own peace.

This doesn’t mean rebellion — it means building quiet strength. If this relationship is truly what you want, start gently setting emotional and logistical boundaries. You can continue to present him as a “friend” for now while you plan your next step. You may need support — from a mentor, therapist, or trusted elder — to navigate this transition calmly and safely.

What’s most important is that you do not let fear become your compass. Your parents’ insecurities are not your burden to carry forever. Your life, your relationship, your happiness — they are yours to own. And if you ever feel overwhelmed, remind yourself of everything you've overcome already. You walked away from a premier institute and built something solid for yourself. That kind of strength doesn’t go away — it just needs permission to rise again.

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You deserve a love that expands you, not a love that asks you to shrink.

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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.

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