I’ve offered a bit of non-agricultural land for ₹30 lakh on fifteenth April, 2022 which was purchased by me in yr 2000 for ₹10 lakh. Out of ₹30 lakh, I would like ₹10 lakh for completion of my home which is below development. Kindly counsel the best choice to save lots of tax on the total worth of ₹30 lakh. Can I reinvest in a smaller piece of land costing about ₹16 to 18 lakh along with the ₹10 lakh in direction of completion of my home development to save lots of the tax?
There are two choices for saving long run capital beneficial properties on sale of a non-agricultural land. You’ll be able to both use one or each for claiming the exemption. First, exemption could be claimed below Part 54F by investing the sale consideration acquired on sale of the land for purchasing or developing a residential home inside prescribed time interval. For claiming exemption in respect of funding in an below development home, the regulation requires the home to get constructed inside a interval of three years from the date of sale of the land. The regulation doesn’t stipulate something about when the development of the home ought to have been commenced.
So in my view, you’ll be able to declare exemption in respect of capital beneficial properties attributable towards 10 lakh which you might be planning to make use of for finishing the below development home so long as the identical is accomplished inside three years from the date of sale of the land offered you don’t personal multiple home on the date of sale of the land.
The quantity of ten lakhs which you might be planning to make use of for completion of the below development home needs to be utilized by thirty first July 2023. Any quantity remaining unutilised by thirty first July 2023 needs to be deposited with a financial institution below Capital Positive aspects Account Scheme by that date. The quantity so deposited can be utilized for making fee for the below development home.
The second possibility is out there below Part 54EC to put money into capital beneficial properties bonds of any of the required monetary establishments like Rural Electrification Company, Nationwide Freeway authority, Indian Railway Finance Company and Energy Finance Company inside six months from the date of sale of the land. Please be aware that you’re required to speculate solely the listed capital beneficial properties attributable to the sale consideration of steadiness 20 lakhs.
There isn’t any exemption accessible from long run capital beneficial properties by investing in land until you want to get a home constructed on it inside the prescribed time restrict of three years. Since you might be planning to say exemption in respect of your current below development home, you will be unable to say exemption below Part 54F once more for one more home.
Balwant Jain is a tax and funding knowledgeable and could be reached on jainbalwant@gmail.com and @jainbalwant on Twitter
Supply: Live Mint