09 May 2010
A house built in 1977 was sold in May 2008 for Rs.85.00 lacs after indexation the indexed cost was 36.00 lacs and the capital gain was 49.00. Exemption u/s 54 was taken being amount invested in purchase of residential plot for Rs.53.65 lacs. In Nov 2008. No construction has been done on this plot and now I want to sell this plot and buy a house from the sale proceeds. What is the position regarding exemption already availed under Capital Gains. Shall I have to pay tax now ? What shall be the position as regards to the second transaction i.e. sale of plot and purchase of house?
11 May 2010
In your case,you sold the new asset within three years, your taxability would arise in following way :
Your cost of plot would be reduced by amount of capital gains exempted earlier, hence your cost would be Rs.4.65 and when you would reduce it from sale, the difference would be taxable as Short Term Capital Gain.
Unfortunately, for this short term gain, no exemption is prescribed under law (as is for long term capital gains. Only deductions are under 80C-80U (if any applicable)
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