Capital gain exemption

Tax queries 491 views 5 replies

ritesh

106 Points Joined June 2009

hello everyone...

i will be selling my Flat to the Builder at the tune of 1.25 crore Rs.

i wanted to know whether the following tax planning would entitle me for the capital gain exemption under residential property head.

the plan is to invest the entire sum of money in FD and take a loan for the payment of new flat on the security of FD...

my question is whether this new flat taken on basis of loan will entitle me for the exemption of Capital gains which will accrue on the sale of old flat.

assuming all the formalities will be done within the laid down time.

thanks everyone.

Replies (5)

Devendra

Chartered Accountant

4780 Points Joined March 2009

In your case, as per my opinion, you will be eligibile for the exemption of the long term capital gain arising on the sale of flat.

Regards,

Devendra Kulkarni

ritesh

106 Points Joined June 2009

thanks devendra...i have the same view... Want to know further how many gives the same opinion... :)

Palash Gupta

Student...Hoping to pass Inter

892 Points Joined April 2009

ya ya ritesh if ur using the proceeds of gain to purchase new flat then exemption u/s 54EC shall be allowd to up upto amount of gain used for purchase of flat!!

Devendra

Chartered Accountant

4780 Points Joined March 2009

@ Palash : You are mistaken. In the above case one flat is sold and the proceeds received from the flat sold are used in buying another flat, so here the exemption will be u/s 54 and not u/s 54EC. Whereas exemption u/s 54EC is availed if the assessee has Invested the capital gains in certain bonds.

Regards,

Devendra Kulkarni