Tax on unutilized LTCG from property

For the capital gain generated through sale.of plot in Aug2018, long term capital gain account was opened with a nationalized bank and exemption was sought under section 54 for purchasing or constructing another a new house. But due to covid the amount remained unutilized and 3 years of exemption got over in Aug 2021. My query is that the unutilized gain will be treated as income for FY 21-22 or for the FY 18-19, since it was generated at that time and do we.need to pay interest as well on the income tax incase it is treated as income from FY18-19. Or do we just need to pay LTCG tax of 20 percent considering it as income in FY 21-22.

PLS HELP

Replies (3)
Quick Summary
This discussion clarifies the tax treatment of unutilised Long Term Capital Gains (LTCG) from property sales. If funds deposited in a capital gains account for Section 54 exemption remain unutilised after the three-year period, the unutilised amount is typically treated as income for the financial year in which the exemption period ends (FY 21-22 in this case). This means tax will be assessed in AY 2022-23, and advance tax may be payable. The query also touches upon interest accrued within the capital gains savings account, distinct from interest on the capital gain itself.

The LTCG and the interest for the current year is income for the FY 2021-22; & accordingly assessed in the AY 2022-23. But get certificate from jurisdiction ITO for withdrawal of funds from the CGSS acct.

Thanks for the reply. But if it will be treated as income for FY 21-22, then why do we need to pay interest on it? We will be paying advance tax right now and will be closing the LTCG account after taking due permission from AO. and the tax paid will be filed in ITR for AY 22-23? 

By interest, what I mean is interest accrued in the CGSS account, and not the interest over the capital gain (for 3 years)! !!!

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