Capital gains (long term) investment scheme

In my view, to claim an exemption under section 54, the 'uninvested' long term capital gains must be deposited in Capital Gains Account Scheme before filing the income tax return and a proof of the same has to be given alongwith the return.

Further, there is no point to point matching concept for the new investment. E.g - If capital gains amount to Rs 10 lacs, then its not that the new property has to be purchased for Rs 10 lacs only. It can be more or less as well. But yes, the source of funds (other than the sale proceeds) must be legally proven, if required.

As per section 54 if the Capital Gains could not be appropriated towards purchase of new house on or before the due date of filing the I-T return then the same are requried to be deposited in the Capital Gains Accounts Scheme beofre filing the I-T retunr & exemption can be claimed for that Asst Year.  If the gains are not deppsited in the CGAS then the entire Cg is taxable in teh previous eyar.

In your case you ahve deposited the CG in your NRO account instead of the CGAS so the entire capital gains would be taxable in your hands.

Yes it is mandatory that the source of funds shud come from the sale proceeds of teh old property.  This is because when you sell your property there arises Capital Gains tax on it.  But you cna avoid this CG tax if you invest the Capital Gains in a new property and claim exemption for CG tax.

Thanks for the swift reply.  It is clear now..

 best regards,

RK