What could be the tax liability?

On such basis, the indexed cost would work out at Rs 43,650. The long-term capital gain after deducting the said indexed cost from the net sale consideration would work out to Rs 5,56,350. The capital gains tax @ 20% plus education cess @ 3% thereon would work out at Rs 1,14,608. The above amount of tax could have been saved if you had invested the amount of net sale consideration (i.e. Rs 6 lakh in this case) in the acquisition of tax saving bonds within six months of the date of transfer.

You now have an option to buy a residential house within two years or construct a residential house within three years of the date of transfer of the plot and invest the above amount of Rs 6 lakh in such acquisition or construction. However, so much of the above amount of Rs 6 lakh as is not utilised for either of the above-prescribed investments before the date of filing the income tax return should be deposited with a bank in a capital gain scheme account to avail the benefit of above exemption.