Income tax: Capital beneficial properties exemption for non-construction of home inside 3 years

I bought a plot on 25/01/2006 for ₹12 lakhs and bought it on 31/03/2022 for ₹92 lakhs. After this, I bought a plot of ₹65 Lakhs for the development of a residential home in June 2022. The remaining quantity of ₹25 lakh was deposited in Capital Gain a/c on thirtieth July 2022. I claimed exemption beneath Section 54F for the overall long-term capital beneficial properties in respect of the sale of the plot. Now I want to know whether or not I can make the most of the remaining quantity stored in Capital achieve a/c for my son’s marriage. Is there any capital achieve tax I’ve to pay?

Answer:   For claiming exemption beneath part 54F of the Income Tax Act, for long-term capital beneficial properties on the sale of any asset aside from a residential home one has to take a position the web consideration for buy of 1 residential. The funding needs to be made inside two years from the date of sale of the asset. If a residential home has already been purchased inside one 12 months earlier than the sale of the asset, you may nonetheless declare the exemption. If you want to assemble a home, you might be allowed an prolonged interval of three years to get the development accomplished to avail of this exemption.

Though you’ve got already availed the complete exemption by investing in a plot and depositing the stability cash within the capital beneficial properties account, the exemption claimed earlier can be reversed when you fail to get the residential home on the plot accomplished inside three years from the date of sale of the unique plot. So must pay tax on the overall capital beneficial properties if the development of the home shouldn’t be accomplished by 31 st March 2025.

You can withdraw the cash in a capital beneficial properties account both for making cost for the development of the home. You may withdraw the cash at any time after acquiring a letter out of your assessing officer containing instructions to the financial institution to permit such withdrawal. 

In my opinion, you can’t withdraw this cash for the wedding of your son except acceptable taxes have been paid and a letter from the assessing officer is obtained.

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Updated: 03 Aug 2023, 12:27 PM IST