we intend to dispose 2 prop. do v need to keep this amount in cg separately or in one a/c. if v intend buy prop in 2 years can v keep in fd saving or cg is compulsory. how many prop can b bought from deal. in my case I have already committed around 40% amount in a prop in instalments, for which I have already paid one instalment from my pocket. can I take this amount which is pre deal from deal. balance need to b kept in cg or sfd and if I invest in 2 yrs still I need cg. since my wife is also disposing her prop and if v acquire prop in 2 yrs do v need to invest in cg. if v buy a joint property can v both invest from our deal amount in a joint property. what will b tax liability.

Ans: (A). Let's first talk about F/Y 2023-24 :
You jointly sold a Property during the year for Rs.76.80 lakhs (64.80+10.00+2.00), & sold the same for Rs.100.00 lakhs.
You have jointly also purchased Property No.3 (I suppose it is Residential only), for Rs.140.00 lakhs.
You should avail exemption u/s-54 & file your ITR accordingly. Please disclose all details about sale & purchase in your ITR.
02. Now coming to the F/Y 2024-25 :
You intend to Sell Property No.2, which was acquired in 2023-24. Any Gain on Sale of it would be Short Term capital Gains & taxed accordingly.
Alternatively, you may hold this sale of property no.2 (for 2 years from its purchase) & avoid STCG
You are free to utilize the sale proceeds in a way you like, including paying off your housing Loan.
Please note to avail exemption u/s 54 only from investment in property no.3 & not 2.
Most welcome for any further clarifications. Thanks.

Ans: The biggest change is that the benefit of indexation gets withdrawn.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

Ans: To determine your tax liability for the sale of the plot, let’s break down the situation:

Important Details from Your Case
Date of Allotment: 25-May-2016.
Date of Registration: 17-Jun-2024.
Date of Possession: 18-Nov-2024.
Total Cost of Acquisition: Rs. 23,64,631 (including stamp duty).
Sale Price: Rs. 33,00,000.
Circle Rate: Rs. 25,900 per square metre (revised from Rs. 15,620 per square metre).
The total holding period and your choice of taxation method will determine whether you incur LTCG (Long-Term Capital Gains) or STCG (Short-Term Capital Gains) and the corresponding tax liabilities.

Is the Gain Long-Term or Short-Term?
The date of allotment (25-May-2016) is generally considered the purchase date for real estate. Since you are selling the plot after holding it for more than 36 months (over 8 years in your case), your gain qualifies as Long-Term Capital Gain (LTCG).

Calculating the Capital Gains
Sale Price: Rs. 33,00,000.

Cost of Acquisition: Rs. 23,64,631.

Capital Gain: Rs. 33,00,000 – Rs. 23,64,631 = Rs. 9,35,369.

Taxation Options for LTCG (as per the updated rules for sales after 23-Jul-2024):

Option 1: Tax at 12.5% without indexation.

Tax = 12.5% of Rs. 9,35,369 = Rs. 1,16,921 (plus applicable cess and surcharges).
Option 2: Tax at 20% with indexation.
Indexed Capital Gain = Rs. 33,00,000 – Rs. 31,15,434 = Rs. 1,84,566.
Tax = 20% of Rs. 1,84,566 = Rs. 36,913 (plus applicable cess and surcharges).
Choosing the Better Taxation Option
Option 2 (with indexation) is clearly more tax-efficient in this case.
You will pay a lower tax of Rs. 36,913 instead of Rs. 1,16,921 under Option 1.
Suggestions for LTCG Exemption
To further reduce or eliminate your LTCG tax, you can explore the following exemptions under the Income Tax Act, 1961:

1. Section 54F: Invest in a Residential Property
If you use the sale proceeds to purchase or construct a residential property, you can claim exemption under Section 54F.
Conditions:
You must not own more than one house property on the date of transfer.
The new property must be purchased within one year before or two years after the sale, or constructed within three years.
The entire sale consideration should be utilised to claim full exemption.
2. Section 54EC: Invest in Specified Bonds
Invest up to Rs. 50 lakhs in NHAI or REC Capital Gain Bonds within six months of the sale.
The investment is locked in for five years and offers a safe, tax-saving option.
3. Capital Gains Account Scheme (CGAS)
If you cannot immediately utilise the sale proceeds, deposit them in a CGAS account before the filing deadline.
This allows you to keep the exemption intact while planning future investments.
Final Insights
Your plot sale qualifies for LTCG tax. The 20% with indexation option significantly reduces your tax burden.
To minimise tax, consider reinvesting under Section 54F or 54EC.
Consult a Certified Financial Planner or tax expert for tailored advice on reinvestment options and compliance with timelines.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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.