Long term capital gain tax - exemption ref. section 54

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 January 2015 I would like to avail Capital Gain Tax Exemption in full. Presently I am living in a flat at Gurgaon and looking for buyer to sell this property. This will take some time. But meanwhile, I am going to buy from the present allotee, an under construction property (flat) at Kolkata for which 80% payment has been made by the present allotee & 20% to be paid by me upon transfer to my name by the Developer at the time of possession later this year. For transfering this Kolkata property to my name, I have to make immediate payment to the present allotee by breaking my Bank fixed deposits and later on balance payment to the Developer to be done from part of my sale proceeds by selling my flat at Gurgaon. I would like to re-invest the balance sale proceeds making new Fixed Deposits. May be noted that the buying price is more that the selling proceeds.
Under the circumstances am I eligible for capital gain tax exemption under Section 54 for the entire amount of sale proceeds? If Section 54 allows to buy a property one year before selling, then how the funding will be done to buy first and sell later?
Request for your expert advice.

Amol S Joglekar

Amol S Joglekar (Expert)
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22 January 2015 "one year before or 2 years after the date of transfer of Capital Asset".... the very provision envisages that ASSESSEE has to use some other money to purchase the flat withing a period of one year before the date of transfer of Capital Asset..(Gurgaon flat in your case)

You can very well go ahead, subject to however the other conditions of sec 54

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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22 January 2015 If you utilize your own funds breaking FD for buying house before one year no problem you are complying with provisions of section 54.
You proposal stated above is fully complying with the provisions of section 54. You are eligible for capital gain exemption for entire amount.

Rupesh Jain

Rupesh Jain (Expert)
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22 January 2015 under the law you can buy one year before or two year after the selling you can construction the property and but with in 3 year from the date tfr.
then you have to invest the capital gain u/s 54.

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