Capital Gains Tax Exemption Scheme

As far as i have read none of the sections speak about investing in FD of a nationalised bank.

Sec 54EC gives an option of investing them in NHAI bonds or REC bonds.

Dear Sam,

In case of sale of a capital asset - capital gain is taxable - It is computed as follows

                         Sale Price  = xxx

Less: Cost of Acquisition = xxx

Less: Cost of Improvements= xxx

Less: Expenses on Sale = xxx

There will be either of following two treatments under Income Tax depending upon the Period of Holding (including the period for which property ws held by ur Father)

If it exceeds 36 Months

In that case the resultant Gain will be Long Term and will attract Tax @ 20%.(Flat + education cess 3%)

{Since ur residential status is of NRI so the unexausted Exemption limit cannot be used}

In this case, the cost of acquisition & cost of improvements is indexed by taking the correspoing Inflation Indexes prescribed for this purpose.. 

The benefit of making FD for 5 years is NOT available in this situation.

The above Gain can be made exempt u/s 54, if U buy another property within 2 years from the date of sale of the property in question or if u construct a property with in 3 years from the date of sale.(Till that time u have to deposit the money in a Capital Gain account scheme specially meant for this purpose with a Bank)

{Since u used the term "Property" which I m supposing as Land & Bulding both but if u meant only Land then Exemption u/s 54EC can also be claimed by investing the amount in REC or NHAI Bonds within 6 months from the date of sale. Here the limit is Rs. 50 Lakhs}

If it is 36 months or Less

In this case the resultant Gain will be Short Term & will attract Tax as per Slab rates.

{Exemption limit can be availed in this case}

The benefit of Investing in FD for 5 years can be claimed but again only to a maximum of Rs. 1 Lac.

No corresponding exemption provisions are there in this case.

Dear Sam,

This income becomes taxable under the head capital gains, and for claimimg exemption under capital gains, deposit in FD with bank does not qualify.

Capital gains tax on sale of house property may be long-term or short-term. It depends upon the holding period of house property. If holding period is more than three years then capital gain arising from sale of house property, will be taxed as long-term capital gain. If holding period is less than three years then capital gain arising from sale of house property, will be taxed as short term capital gain. Exemptions are available only in case of longterm capital gains. They are:

Exemption under section 54:

Capital gain arising from transfer of residential house:

Some important conditions are:

Only individuals and HUF assessees are eligible for this exemption.

The residential house property which is transferred should be held by the owner for more than three years.

The assessee should purchase a new residential house property within one year before or within two years after from the date of transfer of previous residential property or construct a new residential house property within three years from the date of transfer of previous residential property.

The amount of exemption is cost of the new residential house or capital gains whichever is less. In other words for availing total exemption at least the capital gains have to be invested in the purchase/construction of the new house.

Capital gains not to be charged if investments made in certain bonds. Some important conditions are: Capital gain should be long-term capital gain. All types of assessees are eligible for deduction. Investment should be equal to long-term capital gain tax otherwise proportionate deduction available. Investment should be made within six months from the date of transfer of long-term capital assets. Locking period of investment is three years. Details of available bonds are as follows: i) Rural Electrification Bonds. ii) National Bank for Agricutlure and Rural Development bonds. ii) National Highway Authority of India. iv) Small Industries Development Bank of India Bonds. v) National Housing Authority of India Bonds.

regards,

ratan

HELLO SAM,

I GIVE YOU ONE IDEA WHICH IS SIMPLE , YOU WITHDRAW YOUR WHOLE MONEY FROM FD'S AND PURCHASE THE BONDS OF RECI NHAI

THANKING YOU

YOURS TRULY

DARPAN AGGARWAL

hey dude invest dat money in providend fund you will not be taxable...by investing money in FD for 3 years u will get long term capital gains...as u hav sold ur

Hi

If you are interested in purchasing any house property do it, but you should deposit  that amount in capital gain account till you purchase, and that also available for a period of  3 years otherwise you will pay tax on such capital gain.        

or

You will invest that amount in these funds  i) Rural Electrification Bonds. ii) National Bank for Agricutlure and Rural Development bonds. ii) National Highway Authority of India. iv) Small Industries Development Bank of India Bonds. v) National Housing Authority of India Bonds. 

These are the only two options available to you in order to avoid tax. I think you will have to invest that amount in another house property  that will fetch you good profit than investment in the above 5 schemes because real estate business is going well now.
 

Hi,

It seems there are different views. I made one research in capital gain investing for one of my client. Would like to share the same to you.

If you are going to purchase house property in next 3 years, please deposit the money in any of the following two schemes.

There are two type of investments, one is Deposit under CGAS in nationalized Bank and second one is investment in bonds under REC / NHAI.
 
In first case, you have to deposit the money in nationalized bank before 31st July.This deposit is same as normal deposit, except that bank officer will right on the top of deposit receipt “deposit under CGAS”. You can withdraw this amount showing the proof for purchase of house property.
 
In second case, you have to deposit in REC/NHAI bonds within 6 months from the date of sale.
So, you have to plan, which one you want to opt. 

Thx

Dharmaraj

Thank you very much for your replies.

How is GSR 724(E) dated june 22 1988 relavent in this context?

My ques is my client have deposited 50lakhs in Capital gains scheme account however he couldnt utilise the money within such time limit emntioned in Act and the time limit has been crossed now he wants to claim deduction in 54EC by investing in NHAI Bonds ??Can he gets deduction u/s 54EC?