Capital Gains on Industrial Property...

Tax queries 242 views 5 replies
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Director
29 Points Joined March 2011

Hello,

 

I have an HUF proprietorship firm and a long term investment in industrial property in the name of the firm. If I intend to sell that property and invest the amount in another industrial property within th same financial year, would th capital gains tax come in to effect? Would I be liable to pay for the same?

 

I know if I invest in residential then I would be exempt but here the selling & buying, both properties are industrial. 

 

Requesting expert CAs to advice on same. Thank you.

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On 18 April 2025 at 20:19 Report
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Master in Accounts & high court Advocate
9157 Points Joined December 2011

Capital Gains Tax on Sale of Industrial Property As an HUF (Hindu Undivided Family) proprietorship firm, the tax implications on the sale of industrial property and subsequent investment in another industrial property are as follows: -

 *Capital Gains Tax*: If you sell the industrial property, capital gains tax may be applicable. -

 *Long-term Capital Gains (LTCG)*: If the property is held for more than 24 months, it would be considered a long-term capital asset, and LTCG tax would be applicable. -

*Exemption under Section 54EC*: If you invest the sale proceeds in specified bonds (e.g., NHAI, REC bonds) within 6 months, you can claim exemption from LTCG tax. -

*Exemption under Section 54G*: If you invest the sale proceeds in another industrial property within a specified period, you might be eligible for exemption from LTCG tax.

Investing in Another Industrial Property If you invest the sale proceeds in another industrial property within the same financial year: -

 *Roll-over relief*: You might be eligible for roll-over relief, which allows you to defer the capital gains tax liability. -

 *Conditions for exemption*: To claim exemption, you need to fulfill specific conditions, such as investing the sale proceeds in the new property within the specified period.

Tax Liability Your tax liability would depend on: -

*Capital gains*: The amount of capital gains arising from the sale of the industrial property. -

*Exemption claimed*: The exemption claimed under Section 54EC or Section 54G, if applicable. -

*Tax rates*: The applicable tax rates for long-term capital gains. Recommendations -

*Consult a tax professional*: Consult a tax professional to determine the tax implications and ensure compliance with tax laws. -

*Verify exemption conditions*: Verify the conditions for exemption under Section 54EC or Section 54G and ensure you meet the requirements. By understanding the tax implications and exemptions, you can make informed decisions about your investment.

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On 18 April 2025 at 20:54
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CA
1201 Points Joined June 2021

Capital gains - yes

Exemption - no

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On 19 April 2025 at 07:51
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Director
29 Points Joined March 2011

Thanks for replying.

If a residential property is bought post selling the industrial gala, would the exemption be available then?

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On 19 April 2025 at 11:19
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Director
29 Points Joined March 2011

Thanks sir for replying.

Quite detailed but non-conclusive!

Thanks anyways. Appreciate your time & efforts.

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On 19 April 2025 at 11:20
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CA
1201 Points Joined June 2021
Originally posted by : Aarti Kathuria
opening quote Thanks for replying.
If a residential property is bought post selling the industrial gala, would the exemption be available then?		 closing quote

Yes.

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On 19 April 2025 at 16:35


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