Capital gain account scheme

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

21 May 2012 dear sir,
one of my client sold his residential property on feb 2012 Long term capital gain arising to him is rs. 13 lacks.
(acq cost= Rs.7000(1981),
sale price = 35 lacks,
index cost of improvement = rs. 22 lacks)

is he can deposit the same under "capital gain account scheme" for 3 years in certified bank?
or
purchase the capital bond under nhai.

Please suggest me which is the best option for him to save capital gain under various provision in the act and also time period.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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21 May 2012 The assessee can avail exemption u/s 54 or u/s 54EC.

Section 54 deals with exemption from long term capital gain if the capital gain is invested in a residential property.

Section 54EC deals with exemption from long term capital gain if the capital gain is invested in specified bonds.

The assessee should first decide where he wants to invest the money.

If he wants to invest in residential house property then he has to invest the same within 3 years. However, if the amount is not invested by the due date of filing the return, the amount should be deposited in a capital gain account scheme.

If he wants to invest in bonds, the amount is to be invested within 6 months from the date of sale.

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Querist : Anonymous

Querist : Anonymous (Querist)

21 May 2012 dear expert thanks for your quick response.
Sir,
to avail benefit of section 54 is it compulsory to purchase a new asset within prescribed time?
he has no plan to purchase any property in future.
and if he avail benefit of 54ec then after 3 years, is it compulsory for him to purchase new asset?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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22 May 2012 To avail the benefit of Section 54, residential property has to be purchased within 3 years.

If he has no plans to purchase a property then he should invest in bonds. Once you invest in bonds, there is no need to purchase a residential property.

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