Capital gains reinvestment

As per Sec 54F u can purchase a residential house property as 2 years has elapsed. But ur not suppose to sell the HP Before 3 years and u should  not b having any HP before acquring the new one

Thank you for your comments. I have a few queries

1) Should I only buy a plot and construct or can I also buy an old residential house within 3 years, given that I am now in 34th month out of the 36 month exemption time limit to reinvest

2) What happens if I do not reinvest after / within 36 months, but the capital gains is reinvested in a Capital Gains account scheme in an public sector bank. Will I have to pay taxes along with penalty, what will be the penalty. Or Because I have kept / parked the money in an Capital Gains account scheme for 3 years and I am getting lesser interest at 4% than the 6% in NHAI / REC bonds, Can I take out the money and use it after paying taxes on interest

Your advice will be appreciated

Thanks & regards

P S Krishnan 

Thank you for your comments. This has helped me decide the next course of action. I have decided not to buy a property and construct, instead i will pay tax on the capital gains

I had sold a property in Feb 2014, and I invested the capital gains in an capital gains account on 31 July 2014 with the objective of buying a housing plot and constructing a house. But on account of change in property registration policy of Tamil Nadu, I was not able to purchase / register a plot. My 3 year reinvestment period ends in Feb 2017 and I have now decided not to reinvest. The queries I have are

1. If I do not invest the capital gains that is parked in the capital gains account within 3 years, do I have to only pay 20% Long term capital gains tax on the gains, or is interest and penalty on the capital gains for 3 years also applicable (I am aware that I will have to pay capital gains on the interest accumulated in the capital gains account). This query is if there will be interest and penalty on the capital gains

2. Assuming that there is no interest / penalty on the capital gains. Will this capital gains be treated as income for the financial year. If yes which year should I declare the income. I sold the property in Feb 2014, and the 3 year period end in Feb 2017 (FY 2016-2017); and I invested the capital gains in an capital gains accounts scheme in July 2014 and the 3 year period end in July 2017 (in FY 2017-2018). Should this be declared as income in FY 2016-2017 (3 years from sale of old property) or in FY 2017-2018 (3 years from investment in the capital gains account scheme)

Your views will be very much appreciated

regards

P S Krishnan

 If you want to buy land and construct house now:

If substantial investment is made in the construction of the house but the house property has not been completed , it shall amount to construction of house property for the purpose of sections 54 and 54F as decided in the case of Smt. Sashi Verma v. CIT[1997](MP).

In my opinion it will be difficult to do that within just 2 months.

If you want to pay tax:

Long term Capital gain tax will be paid in FY 2016-17(AY 2017-18) the year in which the deadline expires

Thank you very much for your advice, very much appreciate it. I have decied to pay LTCG