Do I get exemption on the capital gains invested in Govt approved bonds?

Respected Sir / Madam,

I have a following query regarding capital gains:

Recently I sold out my old flat. I computed the capital gains based on the indexation formula thanks to one of your articles. My question is if I invest the capital gain amount in the govt approved bond (6%), does this amount gets available to me after 3 yrs without tax? I understand that the interest that I get will be taxable, however I am not clear whether the Principal amount (capital gains) is exempt from taxes towards maturity (after 3 yrs)?

Thanks in advance for your guidance.

Regards,

Manoj

 

Yes, the amount invested by you can be claimed as an exemption.

On maturity of such bonds - only the interest earned would be taxable and the principal would be tax-exempt.

 

Dear Gaurav Sir, Thank you for your prompt reply. I truly appreciate your zeal to support people like us. I had couple of questions again. Hope I am not bothering you too much...
1. I assume that upon the bond maturity period (3 yrs), the principal amount is available to me as free. I mean I can invest it as I wish. Is that correct?
2. There is another way to save the capital gains by purchasing another residential property. If I have already purchased a property before selling my old property, then it says this amount can be used towards my new property only if it is purchased within 1 yr prior. I wish to know from where do I count 1 yr. Is it from the day of agreement that I do with the developer?

Thanks in advance for your help.

Regards,

Manoj

 

In case you are purchasing an under construction property - the date of purchase would be considered from the date of agreement.

 

Dear Gaurav Sir, Thank you very much for your reply. It clarifies my doubts.

Regards,

Manoj