Long term capital gain re investment

Hi

as per Sec 54F U can claim exemption from Capital Gain arising from sale of  Land Provided you construck a house on any on of the land purchased .

Because as per Sec 54 F

On theDate of Transfer you cannot have more than one Residential House property except the newly purchased.

And you cannot purchase within one year or construct another property within three year from the date of transfer other than the new asset.

Please refer sec 54 F of the income tax act

As per my understanding of the sec

you cannot have two residential property

but you can have Land and Residential House Property

But if You do construction on both the land than you whould be having two residential house property.

Capital Gain Account

If Capital Gain Amount is not utilised for the said purpose before the due dat of Filing u/s 139(1) the said amount has to be deposited in to capitlal gain account  to  avail the exemption..

Thanks a lot for providing the clarifications! You have clarified almost all my queries, juz require clarity on the below ones,

* Say i'm doing self construction of the house in one of this land what proof i need to submit to IT dept when filing my returns ?

* Also can I show the cost of acquiring this land and the construction cost or either the one of them ?

Construction needs to be completed before 3 years from teh date of the sale of land.  You need not submit any proof to the IT dept while filing the return.  You will have to deposit the Capital Gains in the Capital Gains Accounts Deposit scheme, as your construction wud not have been completed before the due date of filing the return of Income for A.Y 2012-13.  Keep the copy of the deposit preserved, as you may require it to furnish it to the IT Dept if they query something.

You will be eligible for deduction of the Cost of Acquisition of the land of Rs. 5.25lacs by indexing this cost.  Any brokerage paid on sale of the land wud also be eligible for deduction.

Thanks for taking time to clarify the query!

it looks like i miscommunicated it or not conveyed it completely. Actually I wanted to know that if i'm completing my construction(self construction which is currently in progress) in this financial year itself before filing the returns, what should I submit IT to tell that I have completed the construction and I did it myself.

Also the second question is about the cost of residential plot that I have purchased now(where i'm doing the construction) not the one sold, say i utilized 8 lakhs from my  capital gains to buy it(plus some major loan) and used another 12 lakhs from my capital gain plus additional loan for construction. I would like to know whether i can show this 8 + 12 L for the exemption ? if yes, i believe the proof for land cost is Sale deed. but for construction is there something to be shown or a Self declaration is enough for my own construction ?

You do not have to attach any proofs  while filing the IT Return.  You will show the detailed calculation of the Capital Gains & the related exemption taken in your IT Return.  however you will have preserve all your documents relatign to teh construction, as the IT Dept may raise any query & you should be able to provide all the proofs.

All the Capital Gains whihc is being utilised in the construction activity will be eligible for exemption.