Investing gains in boundary wall and house construction?? please help

1. Amount of 3 lacs received is only advance and u need not pay anytax on that in this year. In next year when the sale deed is finalised, then only it will be treated as transfer of ur property and then only u r liable to Capital gains and u need to pay tax.

So U need not show anything about this 3 lacs in FY 2020-21 ITR. U need to show total 8 lacs in FY 2021-22 ITR.

2. As per Sec 54, construction of a residential house property should be made within 3 yrs to get exemption from capital gains. Now House property as per income tax act implies any building or land attached to it. And further Building means any structure with 4 walls and roof over it. To put it simply even a single room can be treated as House property for income tax purposes.

Now u need not fully construct a RCC house but make sure there must be atleast one newly constructed room in the half constructed house that is ready to move in. It's not required whether u r actually living or not but it should be liveable. Hope u understand what I'm saying. And if required u need to prove the cost of that room and pucca boundary wall cost equals the capital gain amount..

Plse message if u need further clarification..

Thank you Naveen ji for your valuable inputs... To prove that the total cost of 8 lakhs or only the gains part is invested.. The receipts for various bricks, rods, cement can be obtained but the mistry/contractor may not have such receipts so is it okay if i maintain a diary of their wages and submit that along with the invoices of materials as proof... If required, by the IT dept... And moreover will any physical verification be made to see the status of the house by the officials of the IT DEPT... THANX once again... God bless u sir...

1. Capital gain amount is enough. But try to spend minimum 20% more than capital gain amount just for safety.

2. No we can't show the diaries to income tax department. They don't accept it as evidence. And receipts of materials used are also not solid evidence. It's like something is better than nothing. But normally I think if some construction is going on, we need to get permission and other certificates from the local authorities right.. U can try to do that.

In fact all these are for safety purpose only. IT people enquiring and physical verification is very rare. If possible try to get valuation report from any local valuer.

Thank you very much naveen ji.... Your suggestions helped me in clarifying many of my doubts..... God bless u sir...

You're welcome sir. Feel free to message if u need any assistance

I have a two site. I start to construct one site but I don't have much amount so after I sell another site. That's amount use to construction. I don't have resistance house.
1.Doubt is Examption in capital Gain?
2. It's Section 54 or 54F which one considers? Answer me 

I have a two site. I start to construct one site but I don't have much amount so after I sell another site. That's amount use to construction. I don't have resistance house.
1.Doubt is Examption in capital Gain?
2. It's Section 54 or 54F which one considers? Answer me 

I have a two site. I start to construct one site but I don't have much amount so after I sell another site. That's amount use to construction. I don't have residence house.
1.Doubt is Examption in capital Gain?
2. It's Section 54 or 54F which one considers? Answer me