CAPITAL GAIN

[N S CHANDRASHEKHARAPPA CHANDRASHEKHARAPPA]

I AM PURCHASED SITE ON 01/06/1984 OF RS. 25000/- AND SOLD IT ON 10/10/2008 FOR RS.650000. IN THE NEXT MONTH I AM PURCHASED ANOTHER SITE OF RS. 125000/-. I AM STARTED HOUSE CONSTRUCTION ON 28/10/2009. IS IT CLAIMS EXEMPTIONS OR NOT

[CAGOPALJI AGRAWAL]

First you are required to calculate the capital gain on sale of this particular asset after applying indexation benefit. Then you can claim exemption u/s 54F. If it better to consult your CA or advocate on specific planning.

AI Summary

Capital gains indexation: compute indexed gain, then seek exemption under section 54F by reinvesting in residential property. Capital gains on the sale must be computed after applying the indexation benefit to the cost of acquisition; once the indexed capital gain is calculated, the taxpayer may claim exemption by reinvesting the net consideration in qualifying residential property or by constructing a house within the statutory time limits and complying with the conditions for reinvestment-based exemption.