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Long term capital gain on sale of property

nitin (partner) (73 Points)

20 October 2016

hello

my father and mother have multiple joint properties in their name. now they are selling one residential flat. please can you advise the best way to save LTCG. My CA says since they have more than one property in their name they are liable to pay tax. I have checked online on multiple forums and it is mentioned that the amount can be invested in capital bonds for 3 years to save tax. If so the entire sale proceeds have to be invested or only the capital gain part ? please clarify.

thank you.

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12 Replies

saurabh kumar (Tax Consultant) (348 Points)
Replied 20 October 2016

You can save tax u/s 54 EC if you invest the amount of capital gain (not full consideration required to invest) in to NHAI or Rural Electric corp. Ltd. Bonds within 6 months from the date of sale/transfer and keep it invested up to 3 yrs.(sub. to a limit of Rs. 50 Lakhs).

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ACMA M.Abdul Khaliq (CMA) (214 Points)
Replied 20 October 2016

Hi All

If we have 1 crore capital gain 50 lakhs can be invested this FY and another 50 lakhs in next FY

Out of Current 1 crore we have invested only 50 lakhs now, how another 50 lakhs will be treated in current FY fpr tax purposes.

Thanks

saurabh kumar (Tax Consultant) (348 Points)
Replied 20 October 2016

Out of capital gain of 1 cr. if you have invested Rs. 50 Lakhs in the bonds then rest amount will be taxable as LTCG ,you can not claim another 50 lakh as exemption in the next financial year by investing it in the bonds.

ACMA M.Abdul Khaliq (CMA) (214 Points)
Replied 20 October 2016

Whats the standing of Aspi Ginwala Shree ram Eng & Mfg to current date

In it its allowed 1 crore of exemption

nitin (partner) (73 Points)
Replied 20 October 2016

thank you mr.saurabh kumar. number of properties one is holding doesn't matter to claim exemption under SEC 54EC ?

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saurabh kumar (Tax Consultant) (348 Points)
Replied 20 October 2016

No not at all.

saurabh kumar (Tax Consultant) (348 Points)
Replied 21 October 2016

Whats the standing of Aspi Ginwala Shree ram Eng & Mfg to current date

In it its allowed 1 crore of exemption(Originally posted by ACMA M.Abdul Khaliq)

In that case the sale was after 30 september that is why the assessee got a chance to invest another 50 lakh in the next financial year since the condition was to invest capital gain within 6 months of transfer date.The Act also supported it.

But there has been an Amendment due to which an assessee is not allowed to invest the another 50 lakhs from the same capital gain in the next financial year even if the capital asset has been transferred after 30 sep.

Kindly see second proviso of sec 54 EC(1)

https://www.incometaxindia.gov.in/_layouts/15/dit/pages/viewer.aspx?grp=act&cname=cmsid&cval=102120000000036966&opt=&isdlg=1

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Vishal Goel (Chartered Accountant) (1688 Points)
Replied 24 October 2016

Hello @ Saurabh

Can assessee invest 25 lakhs in current FY & 25 lakhs in next FY .(Is it possible ????) Can he claim exemption in this situation ????

saurabh kumar (Tax Consultant) (348 Points)
Replied 24 October 2016

@ Vishal Goel

Yes provided that the sale/transfer of property takes place after 30 sep in a particular year(I mean investment should be within 6 months from the date of transfer)

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 24 October 2016

Originally posted by : saurabh kumar
	Whats the standing of Aspi Ginwala Shree ram Eng & Mfg to current date In it its allowed 1 crore of exemption(Originally posted by ACMA M.Abdul Khaliq) In that case the sale was after 30 september that is why the assessee got a chance to invest another 50 lakh in the next financial year since the condition was to invest capital gain within 6 months of transfer date.The Act also supported it. But there has been an Amendment due to which an assessee is not allowed to invest the another 50 lakhs from the same capital gain in the next financial year even if the capital asset has been transferred after 30 sep. Kindly see second proviso of sec 54 EC(1) https://www.incometaxindia.gov.in/_layouts/15/dit/pages/viewer.aspx?grp=act&cname=cmsid&cval=102120000000036966&opt=&isdlg=1

Agree with Saurabh

This amendment will take effect from 1st April, 2015 and will, accordingly, apply in relation to assessment year 2015-16 and subsequent assessment years

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ACMA M.Abdul Khaliq (CMA) (214 Points)
Replied 25 October 2016

Thanks Bro