Capital Gains on sale of property

Dear Friends,

I am writing with a lot of hope.

I bought a flat in Mumbai whose inflation adjusted value today is Rs. 7 lakhs.

I am selling the flat for Rs. 20 lakhs to a close relative.

The ready reckoner value for the flat is Rs. 35 lakhs.

I do not intend to reinvest the proceeds in another property and hence investing the entire 20 lakhs in the property capital gains tax saving bonds of NHAI/REI issued by the government of India. However that will still leave me with a capital gains liability on the remaining 8 lakhs (35 lakhs -7 lakhs -20 lakhs).  Can I invest further 8 lakhs from my existing savings and by borrowing from friends into the NHAI/REI bonds to save on the capital gains?

Thanks

Replies (6)

The section 54EC states that capital gains can be invested and hence in the above case u can invest Rs. 28 lakhs in the bonds as per reading of section 54EC.

yes u can invest 28 lakhs

Investment in certain bonds

YES as per u/s 54EC you can exempt from any capital gain (8 lakhs) by  investing within 6 months from your existing savings and by borrowing from friends into the "Long -Term Spesified Assets" i.e. NHAI/REC bonds redeemable after 3 years to save on the capital gains.

yes u can invest rs. 28 lakh in bonds

Thanks Aditya, Vijay, Suresh and Saurabh for the prompt and pertinent reply.

i think suresh is right

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