sec. 54B of the income tax act

This query is : Resolved 

31 July 2009

As per sec. 54B, only the amount of capital gain should be deposited as per capital gains scheme. Am I right ?
i.e. If a land is sold for 1200000 and the LTCG amounts to Rs. 400000, then only rs. 4 lacs is to be deposited, not the entire amount. The balance Rs. 8 Lacs can be invested anywhwere.
Further, The amount of capital gain should be deposited in the capital gains scheme for a period of 3 years. What after the period ??
It can be withdrawn and used anywhere or it is to be used for purchase of agricultural land only. If not used for purchase of agricultural land, then LTCG is to be paid or not.
Please solve the query in the way it is asked.

Venkat Rao Marella (Expert)
31 July 2009

Yes. The section requires only the CG to be deposited in the CG deposit account (CGDS) is they are not utilised for the purpose mentioned in the section.

Section 54B exepmts capital gains if they are utlised in acquiring a new asset as mentione din sec 54B or if deposited in CGDS.

However, if the amount so deposited are not utilised before the expiry of the stipulated time, then the amount not so utilised will be chargeble to tax. This implies, the assessee can withdraw the amounts so deposited after the expiry, which are subject to tax.


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