Exemption for taxation on long term Capital Gain from selling of land

Sheikh Zubair (Project Engineer) (30 Points)

01 January 2023  
  • Hi. I am in the process of selling a residential land plot which has no construction on it. 
  • I have held the property for more than 3 years and thus would attract tax under long term Capital Gain on profit.
  • The selling price is much below the government declared stamp duty value and the gap is more than 10%.
  • I intend to buy an agricultural land plot and construct a residential building on it.

My questions are as under: 

  1. For the purpose of calculation of capital gain, what would be considered as selling price? Actual selling price or the stamp duty value price?
  2. Would the exemption be claimed under section 54 or 54F as there is no physical structure on the said land?
  3. Will the cost of acquisition of new land plot be considered for showing the utilisation of capital gain/sale proceeds?
  4. As the registration and other fee are less in case of females, can I buy the new plot in the name of my mother/sister?
  5. Is there any limitations on the size or value of new plot purchased?
  6. What proof need to be provided to the tax department to show the construction of new residential house and cost incurred in its construction.
  7. Do I need to invest on the capital gain value or the whole sale proceeds value to avail full exemption?
  8. Since the actual sale value is lesser than the government declared stamp duty value, what amount needs to be reinvested in order to claim the full exemption?