Long term capital gains tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 March 2013 Later this month, I plan to sell a property on which I have a long term gain of 40 lacs.
I will use this money to pay-off the loan on another under construction property I had bought one year ago. I will get posession of this property in one years time.
Would I be expemt from paying capital gains tax even if I pay down the loan- it is going towards the property that I will claim exemption for.
Thanks

Nikhil Kaushik

Nikhil Kaushik (Expert)
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13 March 2013 Yes it should. As the property will be under your possession within next one year, please claim exemption under Section 54.

What is important is that you buy a new property, the actual utilization is immaterial.

Even if you deposit the capital gains in capital gains accounts scheme, repayment of housing loan should be eligible withdrawal.

other experts may correct me if I am wrong.

Querist : Anonymous

Querist : Anonymous (Querist)

03 April 2013 Can someone pls give me the relevant clauses of the act for this? My CA is not accepting the fact that repayment of loan will be considered for exemption of long term capital gains tax 

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2013 Any suggestions on this pls?
Thanks

Nikhil Kaushik

Nikhil Kaushik (Expert)
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07 April 2013 Hi already mentioned the relevant section 54. Please refer to the same. It squarely covers your case. No need to refer to case laws.

Please understand one thing. The actual application of capital gains is not relevant. What is relevant that you have bought a property within the time period allowed under Section 54 of the Act.

In case your CA doesn't agree to your views, you may seek professional services of another CA.

But before that please ask your CA to give you reason for not accepting your stance.

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