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Regarding capital gain tax on sale of land

Abrar (Others) (56 Points)

07 April 2014

I had sold 1 katha land on Jan 2014 for Rs 1260000. Now I want to take advantage of 54EC (Bonds) and also would pay the boker Rs 1lakh for the deal. Now since the land was sold in last Financial Year, will there be any problem for me getting 54EC rebate if I invest in 54 EC bond in June 2014?

Also the land was in joint holding between my mother and me. Do we need to pay the broker 50,000 each from own accounts so that the 1 lakh of total brokerage is also divided between the two of us? Will there be any problem as the land was sold in last FY (Jan2014) and brokerage paid this FY (april2014) to get benefit of deduction of this 1 lakh from total capital gain?

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6 Replies

Arpit Pachisia (CA) (734 Points)
Replied 07 April 2014

Hello Abrar,

As you said that you had sold the land as in Jan 14. So for availing the benefit u/s 54ec you had to deposit the amount within 6 months from Jan till June14. There is no matter of worry that you had sold the land in prev. FY and amount paid to broker worth Rs. 1,00,000 as brokerage can be given by any of the joint holder (you or your mother). This amount of brokerage will also be considered while calculating capital gain and you will get deduction in sale consideration for Rs. 1,00,000.

Thanking You

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Mihir (Wealth Manager) (5293 Points)
Replied 07 April 2014

If both, you and your mother were co-owners of the land, then both shall be liable to capital gain. Both will have to show this transaction in their ITR. Contact NHAI or REC for details of bonds u/s 54EC.

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Abrar (Others) (56 Points)
Replied 07 April 2014

Originally posted by : Arpit Pachisia
	Hello Abrar, As you said that you had sold the land as in Jan 14. So for availing the benefit u/s 54ec you had to deposit the amount within 6 months from Jan till June14. There is no matter of worry that you had sold the land in prev. FY and amount paid to broker worth Rs. 1,00,000 as brokerage can be given by any of the joint holder (you or your mother). This amount of brokerage will also be considered while calculating capital gain and you will get deduction in sale consideration for Rs. 1,00,000. Thanking You

Thanx for the reply. I have not yet paid the brokerage. So wanted to ask is there any time limit on payment of the brokerage? For example I sold in Jan 2014 and now will pay brokerage in May 2014.

Sathya Sankeerth K N (Chartered Accountant) (429 Points)
Replied 07 April 2014

Dear Arbar,

Brokerage can be paid to the broker even after the sale, that does not restrict you from claiming the deduction. Regarding year of payment, it is better if you enter into an agreement on nominal valued stamp paper saying that the sale has taken place in jan and the brokerage is supposed to be paid for which brokerage is being paid now. This might help you, but try giving him predated cheques and getting it cleared in this year. This might be the better option.

Arpit Pachisia (CA) (734 Points)
Replied 08 April 2014

There is no time limit for payment of brokerage, however you had to show that brokerage has been given for the same property which you had sold in Jan. However if might be possible in your case, you can give brokerage amount in cheque to the broker dated of March, otherwise you had to prove that brokerage has been given for the sale of same above stated property.

Thanking You

Income Tax Wala: (Fin. Expert) (Chartered Accountants) (2010 Points)
Replied 08 April 2014

Dear Abrar

you have asked three questions lets have reply one by one

1. first of all can can invest within 6 month from date of transfer means suppose if sale take place on 15th jan than you can invest upto 14 july 2014.

2. if land is in joint name than this transaction must be shown in income tax return of both the owner. and to claim the benefit of brokerage you have to pay 50,000 from each owner bank account.

3. it is better to pay brokerage as soon as possible so that all transactions looks orginal else there is no time limit to pay brokerage.

NOTE; to claim the benefit u/s 54EC each owner have to invest in bonds from their own bank account.