Capital Gains Account Scheme query

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Thakur

IT professional

23 Points Posted on 22 July 2013

Hello, I sold my residential flat on 1st Aug 2011 and parked my capital gains in a CGAS account. As per my understanding, the tenure to buy a new flat to avoid long term capital gains tax ends in 2 years from the above date...i.e, the last date for me to buy a new flat is July 31st 2013 (I dont want to construct a house).

I have shortlisted a property to reinvest my capital gains but I am afraid the registration process for the new purchase may not complete by 31st July 2013. Can I still purchase the new house and do the registration after july 31st and still claim long term tax exemption? Is there any other option to continue the tax exemption?

regards,

K Thakur

Replies (2)

Deepak Gupta

CA Student

8353 Points Posted on 22 July 2013

If you are not able to register the sale deed within the time limit, you will still be able to claim the capital gain exemption because the date of purchase of new residential house would be the date of ‘purchase agreement’ and not sale deed.

For the purpose of section 54, the date of agreement to purchase should be taken as the date of purchase and the date of registration of sale deed for purchase is not relevant.
- CIT v. R.L. Sood [2000] 108 Tax man 227/245 ITR 727 (Delhi)

Thakur

IT professional

23 Points Posted on 22 July 2013

Hello Deepak, thank you for a prompt response. Your message clears helped clear my doubt - but also helped me realize that my query was incomplete.

I will rephrase the part that I am still doubtful about - What recourse do I have if the date of the purchase falls outside the two years deadline? In other words, the two years from the date of registration of the property I sold end on 31st July 2013. However I do not think I will be able to finalize and enter in an agreement before the date. The agreement may happen in the next month but probably not before 31st July 2013. Can I still claim exemption or will I be required to pay the long term tax of 20%?

regards,

K Thakur.