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Section 54ec

bruno (engineer) (53 Points)

14 March 2012

I bought a house in april 11 on a loan.I have inherited a flat which i am now selling to pay back the loan of the house.i would like to know if i can avail of the section 54ec for a complete tax exemption for the amount received from the flat sale.

kindly let me know

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Akhilesh Kapadia (Employee) (106 Points)
Replied 14 March 2012

Sec 54 series is applicable when sale proceeds of assets are invested to buy another assets and not to repay debts of assets. So ths possibility is squashed. 54EC is meant for investing in specified bonds, after which u can avail full exemption max upto 50 lacs.

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bruno (engineer) (53 Points)
Replied 16 March 2012

Originally posted by : Akhilesh Kapadia
	Sec 54 series is applicable when sale proceeds of assets are invested to buy another assets and not to repay debts of assets. So ths possibility is squashed. 54EC is meant for investing in specified bonds, after which u can avail full exemption max upto 50 lacs.

Section 54 - Long-term capital gains on sale of residential house invested in purchase/ construction of another residential house (subject to certain conditions and limits).

Section 54EC - Capital gains on transfer of long-term capital assets invested in specified assets (bonds).

From 1.4.2006, investment can be made only in notified bonds of NHAI and REC.

Section 54F - Capital gains on transfer of long-term capital asset other than residential house, invested in residential house, subject to certain conditions.

New house should be purchased within 1 year or constructed within 3 years.

You can open a Capital Gains Account Scheme in banks where it is available.
Deposit your capital gains in this account. You have to utilize this amount within 2 years for purchasing a house or within 3 years for constructing a house from the date of sale.
If this deposit is utilized for the specified purpose within the specified period then no advance tax is required to be paid on the gains.
The deposit in the CGAS has to be made by the investor before the last date of filing his ITR for the relevant year.

In case you do not wish to invest the gains in property, then the first day of paying advance tax is 15th of September.