Civil Procedure Code (CPC)

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Exemption from capital gain tax

(Querist) 13 October 2012 This query is : Resolved 
In April'12 I disposed a maternal property (7yrs old),held jointly by me and my brothers.My share was Rs.18lacs of the total selling price of Rs.28lacs.Earlier in May'11 I had booked a flat and had paid Rs 11 lacs from my savings and rest Rs 16lacs from loan from SBI. The flat is still under construction and the total cost including registration will be Rs 35lacs.Immediately on receiving the Rs 18 lacs from the proceeds of the sale of the maternal propeerty I prepaid the loan amount taken form thr bank.
I would like to know if I am elligible for the exemption of Capital gain tax and how much of the exemtion do I get?
A V Vishal (Expert) 13 October 2012
Since the entire amount is invested in acquisition of an immovable property you will not attract any capital gains.
Ms.Nirmala P.Rao (Expert) 13 October 2012

Dear Client,

You are eligible for 100% exemption from long term capital gains tax under Section 54 of the Income Tax Act 1961 as the total capital gain made in the previous sale transaction of your maternal property has been reinvested by you in the purchase of a residential flat, which is wholly exempt from Income Tax.n View the following case law. CIT Vs. P.V.Narasimhan(1990) 181 ITR 101.

Ms.Nirmala P.Rao
Legal Expert
Udayan Roy (Querist) 19 October 2012
Thanks to Ms Nirmala P Rao and Mr A V Vishal. Your advice was of immense help.

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