Capital Gains - Tax exemption

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  1. Parttimeanalyst

    Parttimeanalyst New Member

    Sir.. a little clarification please..
    Usage of capital gains from sale of an asset. I am currently considering selling a piece of land. I have a property that is currently under construction and I would like to use the capital gains to offset costs in the new flat. This would be a flat in addition to one that I currently reside in

    Q1. For the flat under construction can the capital gains from sale of an asset - land - be applied to each of the following
    a. Purchase of furnishings and for carpentry work
    b. To buy out a partner in the property
    c. Applied in proportion for that flat as to builder required infrastructure such as lift, generator, etc., anything that is required for the operation of the flat?

    Q2, For this is it necessary to apply in advance for a tax exemption certificate or is it sufficient to advise the buyer of my asset to NOT deduct capital gains at time of sale?

    Or is this decision required to be made by the IT officer in my jurisdiction. I am unclear how the process works. Any advise will be very helpful.
     
  2. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    To avail capital gain exemption u/s 54F,investment has to be made in one house property & thatoo with the condition that,transferor shall not own more than one house property at the time of transfer.
    Since the property is under construction,you are not owning it at the time of transfer.
    So investment made on this property is eligible for capital gain exemption.

    Once if the sale consideration exceeds Rs.50L,then buyer has to deduct TDS @ 1% on sale consideration & irrespective of the fact that,his seller is going to invest this on another house property.
    And the only remedy which you are having is,you have to file income tax returns and then refund has to be claimed from income tax department.
     
  3. Parttimeanalyst

    Parttimeanalyst New Member

    thanks.. I also read it that way. I am hoping the buyer will see it this way too and not deduct the capital gains at the source. He is checking with the IT assessor.
     
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