Capital Gain on compulsary acquisition by Govt

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  1. taxpayer

    taxpayer New Member

    HI

    I WAS HAVING ANCESTRAL LAND ON WHICH I CONSTRUCTED HOUSE ON 2009. THE COST OF CONSTRUCTION WAS ABOUT 400000 LACS AND THE VALUE OF LAND AS ON 01/04/1981 WAS RS 4500 AS PER REVENUE AUTHORITY. IN 2013 ONE OF THE GOVT DEPARTMENT TOOK THE POSSESSION OF HOUSE AND PAID ME(RS 630000) AND ALSO DEDUCTED TDS(70000) ON THE SAME. THE SALE CONSIDERATION WAS Rs 700000. OUT OF Rs 630000 I SPENT 450000 ON THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE IN 2014 ON ANOTHER PIECE OF ANCESTRAL LAND. . THIS IS CASE OF J&K. NOW I HAVE SOME QUESTIONS IN MIND

    Q1: WHAT COULD BE PURCHASE COST OF HOUSE THAT I TAKE IN CAPITAL GAIN?
    Q2: HOW MUCH MONEY COULD I FEED IN IMPROVEMENT?
    Q3: AM I ABLE TO CLAIM TAX EXEMPTION UNDER SECTION 54. IF YES THEN HOW MUCH?
     
  2. Parul_Gupta

    Parul_Gupta Active Member

    1. The Value of Land as on 01/04/81 would be considered as the purchase cost
    2. The expenses incurred by you in 2009 on constructing the house would be considered as the Cost of Improvement
    3. Yes, you can claim exemption under Section 54 for the amount spent on construction of house i.e. Rs. 4,50,000 as exemption
     
    taxpayer likes this.
  3. taxpayer

    taxpayer New Member

    THANKS MAM FOR YOUR REPLY. AM I GOING TO KEEP SOME DOCUMENTS WITH THE ONLINE RETURN THAT CAN PROVE THE CONSTRUCTION COST OF NEW RESIDENTIAL HOUSE FOR WHICH I AM CLAIMING EXEMPTION UNDER SECTION 54
     
  4. Parul_Gupta

    Parul_Gupta Active Member

    Yes, you should have bills of all the expenses incurred by you on construction.

    Although the bills are not required to be attached with the income tax return, but the income tax dept may ask for the same at a later stage.
     
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