Ltcg on property

Dear Sir,

1. entire sales consideration needs to be invested.

2. no commercial property, exemption is available only in case of purchase of another residential property.

3. you have to purchase the property in your own name, not on son's name.

Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com

thanks , if i dont invest the entire amount in residential prop, will tax be charged on ltcg on pro rata basis or whole amount?

you may either invest in Long Term Capital Index Bonds (lock in period 3 years) (if you want to), however, when you didn't invest the whole amount, then you will be taxed on pro-rata (proportionate) basis...

70 lacs x 939 / 426 = 1,54,29,577/-

4 crore - 1.54 crore = 2.46 crore

LTCG = 2.46 crore

At least ₹2,45,70,426 must be invested to claim exemption U/S 54 on entire amount.

thanks sir , 

but a little confusion , as per lovely sir entire sale consideration has to be invesetd, 

nd as per you , the ltcg amount needs to be invested i.e 2.4 crores as calculated , and if that is the case can the rest amount be used to invest in another property??

can you clear it pls , 

Quantum of Deduction under Section 54:

Capital Gains shall be exempt to the extent it is invested in the purchase and/or construction of another house i.e.

If the entire amount is equal to or less than the cost of the new house, then the entire capital gain shall be exempt.

If the amount of Capital Gain is greater than the cost of the new house, then the cost of the new house shall be allowed as an exemption.

I agree with Mr. Aryan and disagree with Mr. Lovely.

Only the LTCG calculated (around Rs. 2.46 Crores) needs to be invested in a residential house for the purpose of tax saving.

Looking at your query, you want to invest only Rs. 2 Crore in a new residential house. You may do that and invest Rs. 46 Lakhs in 54EC bonds to save tax.

You would still have a surplus of RS. 1.54 Crores which can be invested as per your wish. 

The above planning will have zero tax liability on yourself.

Dear Sahil and others,

sorry, yes, only LTCG amount needs to be invested... sorry, i got confused over the 2nd point, when you asked for commercial property, i inadvertently said the exemption of capital gain for the non-residential property...

sorry for the confusion and sorry for the inconvenience... LTCG needs to be invested, not the whole sales consideration..

thanks everyone for clearing the doubts , :)

Sandeep,

what are u confused about ?