Utilisation of capital gains from sale of flat
S SIVASWAMI
(Querist) 17 October 2014
This query is : Resolved
Dear Sir,
I am a resident Indian individual tax payer owning one self-occupied flat in Bangalore and a rented-out flat in Chennai. I am expecting capital gains of about Rs.80 lakhs from sale of the old flat in Chennai built in 1980. Please help me with the following. I shall make any reasonable fee payment if you tell me how to remit the same.
1. Since the Cost Inflation Index starts with 1981-82, how do I get fair market value of my flat in 1981-82;
2. Can I deposit Long-Term Capital Gains in NHAI or REC of Rs.50 lakhs before 31/03/2015 and the balance Rs.30 lakhs on 01/04/2015, thus getting full exemption from Capital Gains Tax.
3. Can I deposit Rs.50 lakhs capital gains in NHAI/ REC bonds, and apply the balance of Rs.30 lakhs towards purchase of a flat before July 31, 2015.
4. If the above is not permissible, am I left with only 2 options, namely:- (a) to apply the entire Rs.80 lakhs towards purchase of a flat; in this case do I have time upto 31st July 2015, the last date for filing of Income Tax return for financial year 2014-2015; or (b) to deposit the entire amount of Rs.80 lakhs in Capital Gains Accounts Scheme and purchase a flat with the entire sum within 2 years of sale of my existing flat.
Kindly respond immediately.
With high regards,
Yours sincerely,
S. Sivaswami
Anirudh
(Expert) 17 October 2014
Dear Mr. Sivaswami,
1. You have to get the valuation done from the government approved valuer.
2 & 3. One can only save a maximum of Rs. 50 lakhs/- even if the saving is done within 6 months but spread over two financial years. The law has been so amended to this effect in the latest Budget. Earlier, people use to take advantage of the ambiguous provision to claim exemption upto Rs. 1 crore by depositing Rs. 50 lakhs in one financial year and another Rs. 50 lakhs in another financial year (but both falling within 6 months period).
4. Your understanding of the provisions, as stated by you in paragraph 4 of your query is quite perfect.
