Query related to saving tax on long term capital gains

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 April 2014 1) Can the sale proceeds of a residential property be invested partly in bonds and partly in purchase of another residential house in order to save tax on long term capital gain.

2) If yes whether the whole of the sale proceeds have to be reinvested.

3) If not then what part of sale proceeds is to be invested to save tax and what about the remaining part. Is it to be kept in savings account and will it be non taxable.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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29 April 2014 1. yes you can invest part in a residential house and part in bonds.

2. the computation will be a bit complicated. while under section 54, you need to invest only the capital gains, whereas under 54EC, you need to invest the consideration received.

So the appropriate way to deal this is to first invest in 54EC. Compute the exemption under 54EC and then invest the remaining capital gains under section 54.

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