I’m pensioner and submitting ITR 1 often. In the FY 2020-21, I’ve bought a residential plot which was bought in 2002. I purchased a residential flat by investing the cash obtained on sale of the plot and by including some extra money from my financial savings. I perceive I would not have any tax legal responsibility for the earnings on sale of plot of land in view of reinvestment within the residential home. Is my understanding of the legislation appropriate or are there any extra circumstances to be glad to assert this exemption? Also advise the right way to disclosre it within the ITR and which ITR to file?
Though the capital positive factors on sale of plot of land will not be taxable in view of the exemption out there below Section 54F, you can’t file your ITR 1 because the exempt earnings exceeds threshold of 5 thousand rupees. So you’ll have to file ITR 2.
Before you deal with the capital positive factors on sale of plot of land as exempt below Section 54F, let me level out to that it’s important to fulfill sure circumstances earlier than you may declare the exemption below Section 54F.
It appears you will have made the investments within the residential home throughout the identical 12 months so one situation is glad. However, you may declare the exemption below Section 54F on sale of any asset aside from a residential home if and provided that you didn’t personal a couple of home (aside from the one being bought by you) on the date of sale of the plot of land. So in case you had a couple of home on the date of sale of this plot of land, you aren’t entitled to assert the exemption below Section 54F. Even if you happen to owned a residential home collectively with others the identical must be handled as possession of 1 home for the aim of part 54F.
Balwant Jain is a tax and funding knowledgeable and might be reached on [email protected] and @jainbalwant on Twitter.
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