Amount received to give up possession of rental property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 October 2015 Mr. A is in a possession of a bunglow. he came to settlement that a propective buyer will pay him an amount of 1 crore to him to give up his possession,and the rest of amount will be paid to real owner by borrower. here Mr. A will be taxed 30% of amount received . so is there any way by which Mr, A can save the tax?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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22 October 2015 Amount received on relinquishment of possession of property attracts CAPITAL GAINS tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

23 October 2015 so can he claim exemption under sec 54 by purchasing another residential house out of the amount received as compensation?

for this purpose what kind of tax procedures he has to follow?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 October 2015 Yes he can claim exemption u/s 54 By purchasing another residential house within 2 years or construct within 3 years. He has to deposit the unutilised amount in capital gain account before the due date of filing the return.

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