Clarity requested on Section 54/54F

Mr Sumit you have got theanswer in your seperate query.

The LTCG Tax is @20%.

If you intend to build residential house on new plot within the specified period, the cost of plot will be included in the cost of new house for the purposes of exemption u/s 54.

Dear Mr.Vineet,

On the forgoing, just one final question please.  There is a mention in laws that proceeds from sale of such long term capital asset (residential plot in my case) be maintained in a separate Capital Gains Tax account until it is invested in an exemption qualifying avenue. 

But in my case, I am reinvesting the entire proceeds in another residential plot, on which I intend to build a house in a span of 3 years.  I would like to confirm that in my case there is no need to maintain the amount in a separate account, since I am reinvesting the entire proceeds in that plot?  Also, in this case, is there a section in ITR where I can express my intention to build a house, or mention that the re-investment has been made into an exemption qualifying avenue.

Thank you very much.

Yes, there is no need of any capital account as no surplus is left. You have to further ensure, 1. You do not own more than one residential house on the date of sale of plot; 2. You do not purchase any flat within two years or construct any other house (except the above intended house) within three years. 3. You have to hold the new asset for atleast three years.

Hi Vineet,

Sorry for posting again but there is another important clarification that I hope to get.  At this point, I have already bought a residential plot that is almost for the same amount as I obtained after selling my orginal plot recently, with a marginal surplus left.  However, I also purchasing a flat in this fiscal.  Total investment in the flat is for more than the total proceeds I have obtained frm selling the plot.  However, I am taking a loan to fund 60% the purchase.  Therefore, is it OK if I claim exemption of the tax payable on sale of my original plot on account of investing in a flat for my portion of equity in the flat?  Further, can the exemption be also claimed for the loan component as well?

Many thanks!

It is absolutely ok if you claim exemption u/s 54F for invetsment in residential flat within one year of sale of the plot.

 

The funding of purchase by loan is immaterial and you will get exemption in respect of total investment in new flat.