Capital gain on sale of land purchased for residential house

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2012 a) Whether Capital gain arising for the above can be treated U/S 54?

b) If not, how Capital gain can be planned(both short term and long plan)to save or reduce tax?

CA Ilayaraja

CA Ilayaraja (Expert)
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11 September 2012 You can also utilise Section 54 (F) to avail of exemption on the long-term capital gain made from the sale of any asset other than a house. Again, the sale proceeds should be invested only in a residential property, not a commercial property or a vacant plot of land. However, to avail of this benefit, you should not own more than one house.

The long-term capital gain tax can also be saved under Section 54 (EC) if the capital gain is invested for three years in bonds of the National Highways Authority of India and Rural Electrification Corporation Limited within six months of selling the house. However, you can invest only up to Rs 50 lakh in a financial year.

The sale proceeds will be calculated on the basis of the valuation adopted by the state's Stamp Duty and Registration Authority and will not be the amount mentioned in the deed of conveyance. This is intended to cover the cases where a portion of the sale price is received by the seller as unaccounted for cash.

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