CAPITAL GAINS TAX EXEMPTION

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CA Sreenivasa Rao Munaga (Querist)
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01 June 2011 Dear All, I would like ask you all one more question even though my question on 25th may was still unanswered.

I got a query from some other client regarding that he has some capital gain amount on transfer of a long term residential house property.

Now my query is whether shall we get an capital gain tax exemption by investing the sale proceeds in a land or plot.

Otherwise shall we do like - we will deposit the sale proceeds in a capital gain a/c scheme and we will withdraw these funds for purchase of land and construct a residential house within 3 years from the date of transfer.

Thanks,
CA M Sreenivasa Rao
R&S Associates

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 June 2011 1) Reinvestment in land alone will not suffice for section 54.
2) Can deposit it in Capital gains accounts scheme,1988. Subsequent withdrawal can be utilized as u said for complying section 54.

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CA Sreenivasa Rao Munaga

CA Sreenivasa Rao Munaga (Querist)
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01 June 2011 Hi Chackrapani,

Thanks for your reply and i understood it.

After depositing in Capital Gain A/c Scheme, shall we withdraw it immediately or is there is stipulated time period to withdraw the amount deposited? So based on your reply we will deposit in capital gain a/c scheme and later withdraw it for purchase of land and we can construct a building.

Please resolve this once again

Thanks,
CA M Sreenivasa Rao.
R&S Associates

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 June 2011 Deposit account - A is savings deposit which has no time stipulation for the first withdrawal. Deposit account -B is term deposit on which, as u know, the depositor has to keep the time restriction for withdrawal.

CA Sreenivasa Rao Munaga

CA Sreenivasa Rao Munaga (Querist)
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28 July 2011 Shall we need to deposit in Capital gain a/c scheme whether full sale proceeds or capital gain is enough?

Interest on this capital gain is taxable or not?

Please reply to this.

Thanks,
Sreenivas M

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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28 July 2011 The case is covered u/s 54 of the IT Act,1961. 54(2) says capital gains amount need only deposited.
Interest on CGAS,1988 is fully taxable.

CA Sreenivasa Rao Munaga

CA Sreenivasa Rao Munaga (Querist)
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28 July 2011 Thank You Very Much