Capital gains re investment

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This discussion clarifies the rules for reinvesting capital gains to benefit from tax exemptions, specifically under Section 54F. The consensus is that to fully benefit from tax relief on the sale of land, you must reinvest the entire net sale consideration (Rs 61 Lac in this case), not just the capital gains amount (Rs 40 Lac). This is because the purchase price is included in the sale proceeds, and the tax law requires the full amount to be reinvested.

FOUNTAIN HEAD PVT LTD

FOUNTAIN HEAD PVT LTD (Querist)
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12 May 2022 i had sold my land Rs 61 Lac out which capital gains Rs 40 Lac
Shall i re invest for Rs 60 Lac or 40 Lac for get benefit of tax?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 May 2022 You have to invest 61 lacs.

CA Puja Sharma

CA Puja Sharma (Expert)
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12 May 2022 You have to invest the entire sale proceeds of Rs. 61 Lacs.

FOUNTAIN HEAD PVT LTD

FOUNTAIN HEAD PVT LTD (Querist)
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12 May 2022 but my capital gains rs. 40 lac . so my taxable income also 40 lac. so why it is necessary for investment Rs 61 lac.
in the 61 lac purchase price also included.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 May 2022 In case of sale of land section 54F applicable. As per the provisions net sale consideration has to be invested.

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