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.
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.
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.
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.
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.
CAclubindia
