Clarifications required on long term capital gain exemptions

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  1. BVRao

    BVRao New Member

    This is regarding provisions under Income Tax Law for seeking exemption from long term capital gains from sale of an asset other than a house. The questions are
    1. Can the assessee claim exemption of capital gain by investing fully the net sale consideration partly in a residential flat/house and in balance in capital gain bonds assuming that he does not have a residential house in his name?
    2.The assessee has one residential house. The assessee sells land and there is a capital gain. Can he invest entire sale consideration in buying another house and claim exemption? This would imply that ultimately, the assessee will have 2 houses ultimately.
    3. Can assessee choose to pay 10 percent on capital gain with out opting for indexation cost of acquisition rather than paying 20 percent with indexation?
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    1. Yes, the assessee can claim capital gains exemption for investment in house and bonds
    2. Yes, the assessee can purchase the residential house
  3. BVRao

    BVRao New Member

  4. V K Khanna

    V K Khanna Active Member

    As regards your query in para 3 above, capital gain tax at lower rate of 10% without indexation benefits is not applicable in the case of transfer of immovable capital asset.
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