Utilizing Capital gains in new home construction

I have capital gains arising from sale of house property. I plan to do additional construction of my second house as a utilization of CG, which is already constructed on ground level. The utilization of funds will take well over a year. Please clarify:

  1. Can directly I start utilizing funds for construction immediately without transfer into CGAS account? Do I need to submit proofs that money was utilized against construction only while filing ITR?
  2. Remaining amount will be transfered into CGAS a/c. What is the process of withdrawal from account? Can Bills from supplier/contractor be submitted to bank as proof?
  3. Is AO approval involved in utilization/withdrawal of CGAS funds?
  4. On full utilization of funds, within 3 years, Is AO approval required for closure of a/c?
  5. Does ITD mandatorily demands proof of construction completion? I am planning to get valuer's certificate or Architect certificate. Will this be a good proof?
  6. Can cost of Elevator be shown as part of construction cost?
Replies (1)
Query Answer
Start using funds without CGAS? ✔ Yes
Proof at ITR stage? ✘ Not needed to upload, but keep bills
Withdrawal from CGAS? Form C (no bills normally required)
AO approval for utilisation? ✘ No
AO approval for closing CGAS? ✘ No (except sometimes bank formally requests)
Proof of construction? ✔ Bills + Architect/Valuer certificate are acceptable
Elevator cost allowed? ✔ Yes, fully allowed

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