Capital Gain Account

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    A24ABHIJIT New Member


    I am planning to sale my residential land which was purchased by me in 2006. I presume this sale is fall under Long Term Capital Gain. When i receive the money, i am planning to purchase a flat which is going to be my first residential property (as i am currently living in a rented house). I will be doing all these transactions within a span of 1 year.

    Also note that, a flat which i am planning to buy is under construction, for which i am expecting a possession in next 2 years. I am already having a savings bank account in SBI bank and planning to pay the money to the builder as and when construction progresses.

    In this scenario, please suggest whether i need to open an Capital Gain Account ?

    Thanks and Regards,

    Abhijit A.
  2. V K Khanna

    V K Khanna Active Member

    You cannot deposit capital gain amount in the saving bank account. If not utilised before filing the return of income for the relevant assessment year to which it pertains, the amount will have to be deposited in the Capital Gain Account Scheme with the designated bank from where you can withdraw the amount as and when required for making payments to the Builder.

    You can have more details about the scheme from the following link:-
  3. V K Khanna

    V K Khanna Active Member

    Respected Shilpaji,

    I have been following the thread in question and found the answer lies in the discussion which took place between you and Nafeesa.

    We are all aware that as per section 208 advance tax is payable by the tax payer during the financial year if the estimated tax liability of the assessee during that year after tds deduction is Rs 10,000 or more. The taxpayer is expected to work out total tax payable by him based on estimated income for the current financial year and the tax Deptt expects such estimated income to be correct and precise so that the tax payer should not end up paying interest on shortfall or deferment of advance tax payable. The period of 15 day window i.e 16th to 31st March is providrd under the law to enable the taxpayer to discharge the balance advance tax liability which may have arises in respect of income earned during the aforesaid period or any other income which might have skipped the attention of the taxpayer earlier.

    You are right in saying that the assessee can pay advance tax by 31st March. I agree that once this date is over, the taxpayer forecloses his/her option to pay advance tax and this will have repercussions towards payment of interest under 234A and 234B. Both of you agreed on this.

    Nafeesa was right in saying that if the taxpayer skips the deadline of payment of last instalment of advance tax due on 15 March but pays advance tax before 31 Mar, he/she is liable to pay interest. Yes, under Sec 234C (deferment of advance tax), the assessee is liable to pay interest @ 1% for one month only on the shortfall in the payment of last instalment of tax.

    However, there is one exception to this rule. No interest is levied if the shortfall in payment of advance tax is due to capital gain or income arising from winning lottery etc referred to in Sec 2(24)(ix) and the assessee pays the required advance tax on such income as a part of immediate following instalments or till 31st March if no instalment is pending.
    Last edited: Mar 31, 2016
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