Capital Gain

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Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2011 Mr. A sold his flat for Rs.38 Lacs in Feb 2011. The flat was bought in 2003 for Rs.13Lacs in Thane. Now he is negotiating to buy new flat with the above mentioned sale amount plus housing loan of Rs.15 lacs additional. Please suggest his tax liability position for the financial year 2010-11. The purchase of new flat may be finalised in April or May 2011.

Sunil Kr. Sanganeria

Sunil Kr. Sanganeria (Expert)
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07 February 2011 The profit/loss on sale of flat will be treated as long term since you hold the flat for more than three year.

If you invest amount of the capital gain in purchasing a residential house within a period of one year before the transfer or within 2year after the transfer, the whole of the capital gain is exempt.(Section 54)

You will get exemption u/s 54 in financial year 2010-11 even you buy flat in April or May, 2011.

K V Subba Rao

K V Subba Rao (Expert)
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07 February 2011 There will be no Capital Gains Tax liability for FY 2010-11, IF you are able to finalise new purchase by Apr or May 11

If, for any reason, purchase of new flat is likely to be delayed beyond the due date for filing IT Return for FY 2010-11, deposit the amount under Capital Gains Scheme BEFORE due date for filing IT Return for FY 2010-11

Thereafter, when purchase of new flat is finalised, you can withdraw amount and make payment. This process should be completed within two years from Feb 2011

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Guest

Guest (Expert)

07 February 2011 Go ahead. U will get deduction u/s 54