Capital gain

whether the building is residential or commercila please specify

Capital Gain on sale of a residential building:

In the case of claim for exemption from capital gains on sale of a residential house retained for more than 36 months, the relief from tax can be availed by opting either of the following to invest within 6 months of Sale ("Transfer") the gain quantum in 54EC bonds or alternativel to invest the gain in the purchase of another residential property within 2 years or construction of a residential property within 3 years from the date of sale.

If your friend opts for availing the second alternative, then he has an obligation to invest the gain quantum on or before 31.07.17 in a capital gains deposit scheme.

In case the utilisation in purchase gets completed before the 31.07.17, the gain is considered as utilised.

Any amount deposited into Capital gain deposit account has to be utilised only for that purpose.

If the new house is either not purchased wihin 2 years or the construction does not get completed within 3 years the capital gains proposed to be claimed as exempt in 31.03.17 by deposit, will be brought to tax as capital gain of 31.03.2020.

The construction having been completed before 2011, the asset will be a long term capital asset on its sale in Nov 2016.

If construction cost of Rs. 13 lakhs cannot be proved by way of supporting bank withdrawals or source then in case the officer asks for it during assessment, he may disallow / suggest for making additons in 2011 as investment out of undisclosed income.

To avoid this, the sale proceed of rs. 25 lakhs can be invested in bonds or deposited in Capital gains deposit scheme.

Thank you Mr.Gopal, I need one more clarification that capital gains deposit scheme is available in State Bank of India if not

Please guide me how to deposti in that Scheme

Yes. State Bank of India is covered under Para 2e of the Capital Gains Account Scheme, 1988.

This schemen is published in Taxman's income tax rules book.