Do i require to open a Capital gains account

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 July 2011 Hi, my mother owns a property in Bangalore and would like to sell the property, and construct a new one by purchasing a site within 5 months. The buyer will be giving her 20 lakhs by cheque and 5 lakhs cash for the property.Do i have to open a capital gains account for the same. She is a housewife and 64 years of age. She gets only pension income of Rs. 3800.00 pm.
does she even need to file a income tax return for the same. and how can i do it.

CA Sreenivasa Rao Munaga

CA Sreenivasa Rao Munaga (Expert)
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03 July 2011 When a Property was sold, the sale proceeds (if we are not readily using those sale proceeds immediately for purchase of another house) should be deposited in Capital Gain A/c Scheme with in 6 months or before filing the return of income whichever is earlier.

In the above scenario, you would like to purchase a land and would like to construct a building immediately and i thought you don't require to deposit your sale proceeds into capital gain a/c scheme. However it is better to construct the building immediately as early as possible to avoid the rules and regulations of deposit a/c scheme and Income Tax.

If the sale proceeds have not been used completely for constructing the new house, the remaining amount shall be chargeable to tax. We need to file a return of income in such a case.

Regards,
CA M Sreenivasa Rao.

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