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Issue ID : 109994
- 0 -

REINVESTING PROCEEDS OF CAPITAL GAINS

Date 05 Mar 2016
Replies2 Answers
Views 882 Views

Dear Forum Members

I had sold a property in June 2013 and out of the Capital Gains arising out of the sale of the property, I have invested in land and building. As per the Income Tax Act I had to invest ₹ 46 Lakhs either towards an apartment by June 2015 or buy a land and construct a house by June 2016 to avoid paying Capital Gains Tax

I bought a vacant land in September 2015 for ₹ 90 Lakhs (much more than the Capital Gains that I needed to invest as this is the only land I could afford in the fringes of the city) and commenced construction in November 2015. On completing the foundation and plinth I ran out of funds and I could not complete the construction. As per the Income Tax act I need to have completed the house construction by June 2016. But there is no way I can complete the construction by June 2016 as I do not have the necessary funds to complete the construction

I have an Electricity Connection and a certificate from the contractor for completing the foundation and plinth. Is this good enough for Income Tax or would I have to pay Capital Gains tax as I have not completed a house or a dwelling unit

Suggestions from experts will be appreciated

Regards

Srinivasan Krishnan

Chennai

2 answers
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Old Query - New Comments are closed.

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- 0
Replied on Nov 2, 2016
1.

In my view you to have to complete the construction to claim exemption from capital gains tax.

- 0
Replied on Nov 28, 2016
2.

Thank you Mariappan Sir

Thank you Mariappan Sir for your advice. I have another query

I had sold the Plot in Feb 2014, the capital gains of ₹ 45 Lakhs is parked in a Capital Gains account Scheme in an authorized bank. I need to reinvest by Feb 8, 2017 in an residential house (not an apartment as the 2 year time period has expired for buying an apartment)

It is now almost 2 years 10 months since I sold my plot. The query I have is

Can I buy a built old residential house within the next 2 months to claim the capital gains benefits or should I buy a Plot and construct a house within the next 2 months to claim the capital gains benefits

Your advice will be greatly appreciated

Old Query - New Comments are closed.

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