How to avoid Tax on Long term capital Gain on Sale of Industrial Land

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Quick Summary

When selling industrial land, you may be able to avoid or reduce Capital Gains Tax. While direct reinvestment into another industrial plot might not always qualify for exemption, you can explore options like investing in NHAI/REC bonds under Section 54EC. Additionally, Section 54G of the Income Tax Act may offer deductions if specific conditions are met.

Monika Mittal

Monika Mittal (Querist)

13 August 2021 Sir

Can the tax on long term capital gain on sale of industrial land be avoided if the amount is reinvested in the purchase of another industrial land or there is some other way to avoid this tax on long term capital gain ? Kindly advise.

Regards

CMA Poornima Madhava

CMA Poornima Madhava (Expert)

13 August 2021 As I understand, the exemption in case of industrial undertaking is available only on compulsory acquisition or shifting from urban to rural area or SEZ.
So LTCG would be taxable.
However, if you would invest in NHAI/REC bonds, you may be able to avail exemption u/s 54EC.

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Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

27 September 2021 In addition to what has been stated herein before, an deduction u/s. 54G of IT act can be availed, if the conditions stipulated therein gets satisfied.

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