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Ltcg

shailesh (Service) (227 Points)

05 November 2016

I sold a house in 5/2016. To save LTCG, I have to invest in a new house. So what is the time limit and date i.e. on or before date/ month to save LTCG as per Income tax rules.Pl guide.

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Shivangi Garg (Practicing Chartered Accountant) (110 Points)
Replied 05 November 2016

To avail CG exemption u/s 54 :

1) purchase a house within a period of 2 years from the date of sale or within a period of 1 year before the date of sale

2) construct a house within a period of 3 years from the date of sale.

However plz note that:

1) only one residential house should be contructed/purchased

2) it should be located in India

3) if the amount of capital gain is not utilised for purchase/contruction of residential property before the due date of filing return of income i.e July 2017 then it should be deposited with a public sector bank or IDBI bank in accordance with the Capital Gain Account Scheme, 1988.

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shailesh (Service) (227 Points)
Replied 05 November 2016

Thanks for your guidence.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 05 November 2016

Adding one more point

The new Residential House Property purchased or constructed is not transferred within a period of 3 years from the date of acquisition

If the new property is sold within a period of 3 years from the date of its acquisition, then, for the purpose of computing the capital gains on this transfer, the cost of acquisition of this house property shall be reduced by the amount of capital gain exempt under section 54 earlier. The capital gain arising from this transfer will always be a short term capital gain.

Capital Gains shall be exempt to the extent it is invested in the purchase and/or construction of another house i.e.

If the entire amount is equal to or less than the cost of the new house, then the entire capital gain shall be exempt
If the amount of Capital Gain is greater than the cost of the new house, then the cost of the new house shall be allowed as an exemption

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