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: Unutilised amount of gain is required to be deposited in Capital Gain Account scheme

Ans: As per the provisions of the Income Tax Act in India, if you have made a capital gain from the sale of a residential property and wish to claim exemption under Section 54F by investing in a new residential property, the following rules apply:

- You can claim exemption on the capital gains if you invest the entire amount of capital gains in a new residential property. In your case, the total capital gain is Rs. 15.00 lakh, and you have utilized Rs. 9.00 lakh to purchase the residential plot. To claim the exemption, you must utilize the entire Rs. 15.00 lakh amount for the construction of the new house.

- If you are unable to invest the entire capital gains amount before the due date of filing your income tax return (usually July 31st of the assessment year), you can deposit the unutilized amount in a Capital Gain Account Scheme (CGAS) before the due date to claim the exemption. In your case, if you haven't utilized the entire Rs. 15.00 lakh for purchasing the residential plot and construction has not yet begun, you must deposit the unutilized amount of Rs. 6.00 lakh in the CGAS.

- In your Income Tax Return for AY 2023-2024, you need to show the capital gains from the sale of the residential property, which is Rs. 15.00 lakh, and then claim the exemption under Section 54F for the amount utilized to purchase the residential plot and construct the new house (i.e., Rs. 9.00 lakh). Additionally, you should mention that the remaining Rs. 6.00 lakh is deposited in the CGAS for the purpose of constructing the new house to claim the complete exemption.

Please note that to avail of the exemption under Section 54F, you need to fulfill all the conditions mentioned in the section, such as not owning more than one residential house (excluding the new one) on the date of transfer of the original property and not purchasing any other residential property within a specified time frame.

Ans: Based on the information you've provided, here's a breakdown of your situation:

Sale of Residential Property: You sold your house on 23.04.2023 for Rs. 60 lakhs.
Purchase of New Property: You purchased a new site on 28.04.2023 for Rs. 23 lakhs.
Capital Gains: You potentially have a long-term capital gain from the sale of your house.
Documentation: You lack documentary proof for the construction cost of your house.
Potential Issues and Considerations

Capital Gains Exemption Under Section 54:

To claim exemption under Section 54, you generally need to invest the capital gains in another residential property within a specified timeframe.  
While you purchased a new site, it's not a residential property yet. You would need to construct a house on it within the prescribed time limit to qualify for the exemption.
The amount invested in the new property should generally be equal to or more than the capital gains to claim full exemption.
Proof of Construction Cost:

Lack of documentary proof for construction costs might be a challenge. You may need to explore alternative evidence or methods to substantiate the expenditure.
Consider consulting with a tax professional to discuss potential options and strategies.
Timelines:

The specific timelines for investing the capital gains in a new residential property under Section 54 are crucial. Ensure you comply with these requirements.
Recommendations

Consult a Tax Professional: Given the complexity of the matter and the potential implications, seeking expert advice is highly recommended.
Gather Relevant Documents: Collect all available documents related to the sale of your house, purchase of the new site, and any construction-related expenses.
Explore Alternatives: If claiming exemption under Section 54 is not feasible, consider other potential tax-saving options.
Act Promptly: Timelines for claiming exemptions and potential tax implications are important. Don't delay in seeking professional guidance.

It's crucial to consult with a chartered accountant or tax expert for personalized advice based on your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Dear Sir,

Based on the information shared,
the Long Term Capital Gain shall be around Rs.21,54,000 and Tax liability shall be Rs.431000 (With Indexation)
the Capital Gain shall be Rs.9350000 and Tax liability shall be Rs.1168750 (WithOUT Indexation)

It is strongly advisable to consult CA to understand tax liabilities
Vipul Bhavsar
Chartered Accountant
www.capitalca.in