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CAPITAL GAIN EXEMPTION

Umesh Chandra Prasad (Others) (135 Points)

11 August 2020

"A" has purchased a House property by taking Bank Loan . Suppose within 3yrs from the purchase of the said House Property, "A"has again sold his another Land.Now if the amount of the said land is deposited into Bank to clear the Bank Loan, Please guide me whether this way Capital Gain Tax on the said land will be exempted ?

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6 Replies

CA Sunil Kumar (Chartered Accountant) (4524 Points)
Replied 11 August 2020

Section 54F says that it is compulsory that investment in residential house property is made within a period of 1 year before or 2 years after the date of transfer. So No tax exemption is available in your case.

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Umesh Chandra Prasad (Others) (135 Points)
Replied 11 August 2020

Suppose it is 2yrs in place of 3yrs.What will be the answer ?

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 11 August 2020

If 2 years....than..Not possible
Yes,if it's 1 year than you can.

CA Sunil Kumar (Chartered Accountant) (4524 Points)
Replied 11 August 2020

Agree with Mr. Sagar Patel

Dr Sunil Kumar Agarwal (2 Points)
Replied 13 August 2020

Now a days for computation of Tax on long term capital gain on sale of property, Circle rate is material.
what if the property is sold at twice the rate of circle rate? For Tax purposes Circle rate will be considered of Sales proceeds.

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 13 August 2020

For Computation of Long term Capital Gain
Circle rate or Sale consideration receipt, whichever is higher is taken as sale proceeds.
Subject to 5%/ 10% margin as allowed u/s 50C /43CA.

So, if property is sold at twice the rate of circle rate, than Sales receipt is considered as sale proceeds for LTCG calculation, not circle rate.

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