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capital gain

(Querist) 12 January 2010 This query is : Resolved 
Respected members


my client has got his share in his parents ancestral property now all brothers have sold the house and have got the money. original house was built in 1966 and was sold in jan 2010. The question is now he wants to invest the money in some other property (a plot) in some other city. Till what time he can invest and will investing the amount save him from capital gain tax.Please also tell how much will be the capital gain on 13.70. property was sitauted in chandigarh.
Vineet (Expert) 12 January 2010
Dear Shri Chandureja,

1. For computing capital gain the fair market value as on 1.4.1981 or original purchase price of the property is required.

2. For claiming exemption u/s 54, merely purchase of plot will not suffice as the exemption is allowable for purchase or construction of a new residential house. So not only the plot be purchased but a residential house also need to be constructed on the same within three years of transfer of old property. During this period the capital gain amount can be deposited in a Capital Gains Account maintained in specified Banks and utilised for construction of house.
charudureja (Querist) 12 January 2010
Thanks Mr Vineet
soumitra basu (Expert) 13 January 2010
I do agree with Mr. Vineet and further to add that purchase of plot is also available for deduction under section 54 provided it can be proved that the plot was purchased for construction of residential house property.


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