Capital gain tax on unutilized account

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If you've made capital gains from selling a property and used part of it for government bonds, the remaining amount intended for a capital gains savings account may become taxable if not used for a new property within two years. The tax liability remains the same whether paid now or later, and there's no penalty. While interest earned is taxable, it's not fully recoverable. Investing in a capital gains savings account can still be beneficial, though the cess rate is unpredictable.

Adi Sha

Adi Sha (Querist)

18 January 2022 I recently sold a property and made a 1CR capital gains. I utilized 50L of it by buying a government bonds.

The remaining 50L I plan to put in capital gains saving account.

My question is how much tax will I need to pay if I could not utilize this money (within 2 years of selling old property) on purchasing new property?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

18 January 2022 Same which you are going to save this year...
i.e. 20% +cess over 50 lakhs

CA Puja Sharma

CA Puja Sharma (Expert)

18 January 2022 The entire amount of Rs. 50 Lac which was earlier taken as exempted will become taxable now.

Adi Sha

Adi Sha (Querist)

19 January 2022 Thank you for your replies.
Does the total tax remain the same if I pay now vs pay 2 years later? Is there any penalty over this (e.g had to return all my interest gains)

If the css (which i believe is 4%) remains less than the current saving rates. Does it make sense to keep it in capital gains saving account?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

19 January 2022 1. Yes, tax liability remains same. No penalty. Interest is taxable but not totally recoverable. (For current year tax saving investment in CGAS is mandatory)
2. Cess, not predictable, may increase or decrease.

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