Ans: Capital gain on sale consideration will be reduced by Indexed cost of acquisition and allowable expenses incurred on transfer. You have to calculate indexed cost of acquisition by applying Cost Inflation Index as per prescribed formula on cost of acquisition.

For cost of acquisition, you may take actual cost or fair market value of the asset, as on 01.04.2001.

In case of land and building, fair market value on 01.04.2001 cannot exceed stamp duty value as on 01.04.2001.

Exemption is available if amount of capital gain is invested by purchasing a new residential house within one year before or within 2 years after the date of transfer of the residential house.

As you have already got possession of new property in November 2020, you will not be eligible for exemption.

Decision of investment in specified bonds or acquiring tax mutual funds can be taken after considering several factors like risk appetite, amount of tax liability on capital gain, availability of surplus fund etc.

Ans: Indexation benefit will be available from the date of payments made to the builder.

If you want to avail tax exemption by investing in bonds, you have to invest amount of taxable capital gain (derived after taking benefit of indexation), in bonds within 6 months of transfer of property.

Accordingly, sale proceeds can be realised in regular saving account and can be kept till the time you invest in specified bonds.

Ans: Hi Jayakumar
I am presuming that you are referring to a house that had been acquired as reinvestment of capital gain from another earlier asset.

Considering the above, this reinvested asset (residential house) should not be sold before completion of 3 years as part of the requirements of the earlier reinvestment conditions.

If this house is sold before the term of 3 years then while calculating the long term capital gain of this property, you would need to reduce the capital gain amount (old asset) against the cost of this asset.

An example to understand this is stated below:

Cost of this house (purchased in 2021) is say Rs. 10,00,000
Capital gain reinvested from sale of earlier house is say Rs. 500,000 (i.e. you used Rs. 5 Lakhs from earlier sale)

Suppose you sold this house after holding it for 24 months (making it a long term asset but resulting in failure of the condition of section 54 w.r.t. holding the same for more than 36 months)

Sale consideration of this house is say Rs. 12,00,000

Then while calculating the LTCG of this asset you would need to reduce Rs. 5 Lakhs from the cost and thereafter find the indexed cost

Ans: For taxation on redevelopment, there was amendment from 1.4.2018. Before said amendment, when property is transferred to builder for development, capital gain chargeable to tax. I understand that you have not paid any tax in the year in which property is transferred to builder, accordingly, it is advised to take proper consultancy from tax consultant.