I sell my RHP1 in FY 24-25 say on 1 Oct 2024 for 80 Lakhs that was bought before 23 July 2023. I held it longer than 2 Years, so it is long term. The long term capital gain computed without indexation is 50 Lakhs. I want to use the benefits of Section 54. As per section, I can invest the capital gain in a new RHP bought 1 year ago or 2 year forward, and need to hold it for 3 years. I purchased a PLOT in FY 23-24 say 1 Mar 2024, for 60 Lakhs. Doubts :
1. Can I show the complete 50 Lakhs of LTCG invested in PLOT and claim exemption u/s 54 in ITR of FY 24-25 ? I plan to build a RHP in it. 2. The 3 Year time limit is to buy and construct? 3. When does the 3 Year time limit start, on 1 Mar 2024 or 1 Oct 2024?
The PLOT was bought for 60 Lakhs and estimated construction cost is 35 Lakhs. The PLOT was bought and paid for on 1 Mar 2024. Now when I sell my RHP1 in FY 24-25 on 1 Oct 2024 and make a capital gain of Rs. 50 Lakhs, how do I use exemption u/s 54. Section 54 allows for buying and construction a RHP. The CG amount here is less than the PLOT alone or even PLOT+Construction together but not construction alone.
1.1 If I use the CG of 50 Lakhs for construction only, I will have to pay tax on 15 Lakhs as well as keep the CG in CGAS as construction will be a ongoing process.
1.2 Can I not use CG for both buying and construction, the buying part is already paid off and now I will be paying the construction part. If Yes, How to show the same in ITR ?
08 October 2024
1. There is either buying or constructing. 1.1 No. You can calculate capital gain based on indexation and use the LTCG on construction of HP 1.2 Declare LTCG after indexation & utilize the amount in constructing HP.
CAclubindia
