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How to claim capital gains exemption on sale of plot of land


I personal a 1 BHK flat in Mumbai the place I’m staying. I’ve one other 2BHK property in Surat given on lease.  Along with these two residential properties I additionally personal a plot of land, which I’m holding since 2002.  If I promote this plot of land can I get the advantage of capital features exemption if I purchase third residential home and let it out?

Since you’ve got held the plot of land for greater than 24 months the capital features arising on sale of this plot of land are to be handled as long run capital acquire. The taxable long run capital features shall be computed by deducting the listed price of the plot (by making use of price inflation index to the worth of the price of buy of the plot) from the online sale consideration obtained on sale of the plot. 

As per Part 54 F you may declare capital features exemption arising on sale a capital asset, aside from a residential home, in the event you make investments the sale consideration for buy of a residential home inside specified time. Nonetheless, if an individual owns multiple residential property on the date of sale of such different asset, he can not declare the exemption below Part 54F. Because you already personal two residential home, you can not declare the exemption out there below Part 54 F. 

Nonetheless, so as to save long run capital features tax, you’ve got the choice below part 54EC. As per provision of Part 54EC, it’s a must to make investments the quantity of listed long run capital features in bonds of specified establishments like Nationwide Freeway Authority of India( NHAI) or Rural Electrification Company of India (REC), Railway Finance Company inside six months from the date of sale of the plot of land.. These bonds have a length of 5 years. Curiosity earned on these bonds is taxable as common revenue. The cash obtained on maturity of such bonds is absolutely exempt.

Balwant Jain is a tax and funding knowledgeable and may be reached on jainbalwant@gmail.com and @jainbalwant on Twitter.

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