"A" has purchased a House property by taking Bank Loan . Suppose within 3yrs from the purchase of the said House Property, "A"has again sold his another Land.Now if the amount of the said land is deposited into Bank to clear the Bank Loan, Please guide me whether this way Capital Gain Tax on the said land will be exempted ?
Section 54F says that it is compulsory that investment in residential house property is made within a period of 1 year before or 2 years after the date of transfer. So No tax exemption is available in your case.
Now a days for computation of Tax on long term capital gain on sale of property, Circle rate is material. what if the property is sold at twice the rate of circle rate? For Tax purposes Circle rate will be considered of Sales proceeds.
For Computation of Long term Capital Gain Circle rate or Sale consideration receipt, whichever is higher is taken as sale proceeds. Subject to 5%/ 10% margin as allowed u/s 50C /43CA.
So, if property is sold at twice the rate of circle rate, than Sales receipt is considered as sale proceeds for LTCG calculation, not circle rate.
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