What if we are unable to utilise funds in Cap Gains Account?

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  1. Kiranks07

    Kiranks07 New Member

    Would like to know what happens if we are not able to buy /construct a house to utilize the Capital gains which is deposited in the Bank . Will this get closed after 3 years and we need to pay tax for the principal amount.
    In case we buy a Capital gains bond which is for 3 years , post end of bond will there be a tax liability on the principal amount received back after 3 years.
  2. V K Khanna

    V K Khanna Active Member

    Capital Gain bonds under S 54EC are to be purchased within a period of six months from the date of transfer of the capital asset.

    2 Yes. You will have to pay tax if you are unable to utilise the capital gain amount deposited with the bank, in case the purchase/construction of a residential house is not completed within a period of 2/3 years from the date of sale of the previous asset.
    CA Umesh Agarwal likes this.
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