Investment of Capital gains

1006 views 2 replies

Prince

40 Points Joined April 2007

Hello Bretheren,
I have recently sold (apr.07) a flat at mumbai generating a Capital gain of Rs.20 lakhs, please suggest me the most prudent investment strategy u/s 54 assuming ,

1) I cannot afford to block more than the Capital Gains amount.

2) I am ready to block my entire sales consideration.

Please tell me the exact practical procedure to be followed .

Regards
Prince George

Replies (2)

Ashish Sharma

Chartered Accountant

57 Points Joined April 2007

If the flat you sold was owned by you for 36 months or more, Two options available to you are:

1). Claim exemption u/s 54, if you have purchased another residential house within last 1 year (i.e. April 06 onwards) or invest capital gain in purchase/ construction of new residential house.
You can deposit the capital gain for next 2/ 3 years with the purpose of buying/ constructing the house.

2) Invest the money to the extent of capital gain in Rural Electrification Corpn. bonds or NABARD Bonds within 6 months (Oct,07) and claim deduction U/s 54 EC.

Thanks & Regards,

Ashish