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Hardik

Hardik Parikh  | Answer  |Ask -

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

Hardik Parikh is a chartered accountant with over 15 years of experience in taxation, accounting and finance.
He also holds an MBA degree from IIM-Indore.
Hardik, who began his career as an equity research analyst, founded his own advisory firm, Hardik Parikh Associates LLP, which provides a variety of financial services to clients.
He is committed to sharing his knowledge and helping others learn more about finance. He also speaks about valuation at different forums, such as study groups of the Western India Regional Council of Chartered Accountants.... more
Asked by Anonymous - Jul 20, 2023Hindi
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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.
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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Tejas

Tejas Chokshi  | Answer  |Ask -

Tax Expert - Answered on Jul 22, 2023

Asked by Anonymous - Jul 21, 2023Hindi
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Dear Chokshi JI I have sold a residential property in Feb.2023 and have capital gain of about 15.00 lakh. To construct new house, I have already bought residential plot costing 9.00 lakh and sale deed registered in May,2023. The cost of Plot was meet out from the sale proceed of the residential property sold in Feb.23. Kindly advise whether I have to kept Rs.6.00 lakh (i.e.Gain15.00 lakh minus 9.00 lakh cost of Plot) in Capital Gain Account Scheme for the construction of House OR I have to kept whole money of Capital Gain i.e. Rs.15.00 lakh in the CGAS. How much Amount I have to show in the IT Return for AY 2023-2024 ?
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.

..Read more

Ramalingam

Ramalingam Kalirajan  |6558 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 26, 2024

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sir I have purchased site maesuring 40x60 ft in 2013 for Rs 10 lakhsand consructed a house in 2013 incurring 20 lakhs ,with following all rules by the local authority by paying all the taxes.0n 23.4.2023 i have sold the house for 60 lakhs.on 28.4.2023 i have purchased site for Rs 23lakhs without depositing the amount in capial gain account.kindy advice me whether i can claiim capital gain for purchased site as per sectio 54 of income tax.i do not have any docuentary proof for amount incurred for house construction and can i claim house improvement as capital gain exemptions.thank you sir.hope you will reply at an earliest.Iam a senior sitizen and an agriculrist
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

..Read more

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Ans: Dear Anonymous,
No, you are not thinking right at all...This man is all RED FLAGS...
Are you actually thinking of spending one year with a person who physically abuses you? Seriously?
And then you expect him to agree to that divorce without any fuss? What world are you in? No compromises on your life please...
Be wise and protect yourself...

All the best!
Anu Krishna
Mind Coach|NLP Trainer|Author
Drop in: www.unfear.io
Reach me: Facebook: anukrish07/ AND LinkedIn: anukrishna-joyofserving/

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