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

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  1. ManojK

    ManojK New Member

    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
     
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    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.
     
    ManojK likes this.
  3. ManojK

    ManojK New Member

    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
     
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

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

    ManojK New Member

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

    Regards,

    Manoj
     
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