Mr. Sudhir (imaginary character) earned long-term capital gains of Rs 40 lacs from the sale of one of his residential house property during the current financial year. Here his tax liability will be at 20% of the gains amount i.e. Rs 8 lacs (here 3% education cess has been ignored for ease of understanding). As per Section 54 of the income tax act, he can save the entire tax amount by investing the gains amount in a new residential property i.e. if he purchases it within 2 years or constructs within 3 years a residential house costing Rs 40 lacs at least. Alternatively  he can invest the gain amount in 54EC bonds to save long term capital gains tax which will have a lock in period of 3 years.

What if, Mr. Sudhir doesn’t want to block the money for 3 years in such bonds, even he doesn’t want to take immediate decision for investing in new house property? In this case the option under section 54 brings him a solution. And the solution is Capital Gain Account Scheme.

This is an awesome option for all those tax payers who derive long-term capital gains and have the same issue as Mr. Sudhir have. Under Capital Gain Account Scheme (CGAS), the amount of capital gain which has not so utilised for the purchase or construction of a new residential house before the due date of furnishing of the return of income, it shall be deposited by him on or before the due date in an account with a public sector bank in accordance with the Capital Gain Account Scheme (CGAS), 1988.

What is Capital Gain Account Scheme all about?

The said scheme has been in force since 22nd June, 1988. The amount so deposited under this scheme would be required to be utilised by the tax payer, within the specified period, for acquisition of new asset under the respective Section of the Income Tax Act, 1961.

Under this scheme, the tax payers can avail of the benefit of exemption from Capital Gains, if the amount of Capital Gains or the net consideration is deposited in the bank on or before the due date of filling the return of income.

There will be two types of accounts under the scheme:

Account Type – A: This account will be in the form of Saving Fund Account and the depositor will be provided with a Pass Book, giving the details of receipt, payments and interest paid on deposit as well.

Account Type – B: This account will be in the form of Term Deposit Account and depositor will be issued a deposit receipt. Term Deposit Account can be both Cumulative as well as Non-cumulative on quarterly basis.

Who can take the advantages of Capital Gain Account Scheme?

The advantage of Capital Gains Scheme Account can be availed by individuals and Hindu Undivided Family (HUF). In short, all those tax payers who would like to invest in buying a residential property or in constructing a residential property so as to save tax in respect of long-term capital gain can open CGAS.

Where and how can I open the Capital Gain Account Scheme?

This account can be opened in State bank India or any bank which is authorised for the scheme. To open CGAS account you will have to fill up and submit a form (Form A) and deposit the money in the account. If the money deposited in the form of Cheque or Draft, the effective date for the purpose of provision of exemption will be the date of cheque/draft deposited date subject to realisation.

What is the procedure to withdraw money from Capital Gain Account Scheme?

For withdrawals of funds from CGAS  under Account Type – A can be made from time to time by the depositor, subject to specified terms and provisions of the Scheme by submitting the requisite form where withdrawals under Account Type – B can be made after the expiry of the deposit period only.

Form C should be filled up and submitted to the bank for the initial withdrawal from Account Type – A. For subsequent withdrawal from Account Type – A, form D should be used. Since Account Type – B is a term deposit account, for withdrawal, it will first have to converted in to Account Type – A, by filling Form B and then follow the method of withdrawal as Account Type – A.

When to open Capital Gain Account Scheme?

You can open this account any time before the last date for filing returns of a particular financial year after the capital gains earned. For e.g. If the sale of asset has taken place in August 2012 of Rs. 50 lacs and it arises the capital gain of Rs. 30 lacs, if you don’t utilise this capital gain to buy another property, you can open the CGAS before July 31, 2013 and park the gain amount.

Few Important Points to Remember:

  1. Interest earned in this account is taxable.
  2. It does not allow any withdrawals, except for the specified purpose (of buying the house).
  3. Any unutilised amount after withdrawal has to deposit back.
  4. Amount can be easily transferable from Account Type – A to Account Type – B and vice-versa.
  5. If the amount is not utilised wholly or partly for the desired purpose, within the specified period, the unutilised amount shall be treated as capital gains of the year during which the specified period expires

Procedure to Close Capital Gain Account Scheme:

The depositor himself at any time with the approval from his assessing officer can close the account by submitting requisite from (Form G) to the bank.

On death of the depositor the nominee of the account can also close the account with the approval from his assessing officer can close the account by submitting requisite from (Form H) to the bank.

In absence of nominee the legal heir of the deceased depositor with the approval from his assessing officer can close the account by submitting requisite from (Form H) to the bank. The disclaimer of other legal heir is also required to be submitted to the bank.

In the case, where there is more than one legal heir, the approval of assessing officer will be obtained only providing probate of a will, succession certificate or a letter of administration to the estate of the deceased depositor.

Use Capital Gains Account Scheme To Save Tax

80 thoughts on “Use Capital Gains Account Scheme To Save Tax

  • July 9, 2013 at 3:52 PM
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    I have deposted capital gain amount in CAPITAL GAINS ACCOUNTS SCHEME. But I could not purchase a house in last two years nor could decide to construct one in 3 years from the date of opening capital gains accounts scheme. Two years have gone and now I have decided to invest the same amount in CAPITAL GAINS BONDS OF REC OR NHAI. Will I get tax benefit? Is it permissible to utilise the amount deposited in CAPITAL GAINS ACCOUNT SCHEME to invest into CAPITAL GAINS BONDS ?

    Reply
    • July 9, 2013 at 7:43 PM
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      Hi DB,
      Please note the unutilised amount in capital gain scheme account shall be treated as capital gains of the year during which the specified period expires. Thus you have to pay tax on this amount. Also you are not eligible to invest in 54EC bonds as the provision under the same says “The capital gain shall be exempt u/s 54EC only to the extent it is invested in the long term specified assets within a period of 6 months from the date of actual sale/transfer.”

      Reply
  • July 21, 2013 at 4:42 PM
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    Hello,
    in my case , I am constructing a house with the funds from the capital gains account. The construction of the house may not be fully complete in the third year.However, I have used up all the funds from this account in the third year. Does this rule expect that the house be complete by the end of the third year?

    Reply
    • July 23, 2013 at 1:46 PM
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      Hi Srinivas,

      Yes, this rule applies to constructions time limit.

      Reply
  • August 19, 2013 at 9:19 PM
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    Hi,

    I had sold my house in April 2013 and converted the complete amount to FD. In a month’s time I came to know about the Capital Gains Ac so I created a Capital Gain Savings account and transferred the FDs (for the capital gain amount) to the CG savings account.

    Now I have planned to buy a new house and want to use the complete amount in CG Savings a/c. Do I only need to fill form C ?

    Can I have zero balance in my Capital Gain savings account?

    Reply
    • August 19, 2013 at 9:43 PM
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      Hi Deepak,

      For initial withdrawal you need to use form C, but maintaining a zero balance I will not be able to say anything as it depends on bank whether they have any condition for this or not.

      Reply
  • September 21, 2013 at 8:50 AM
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    Hi,

    I had sold a old property in 2011 and had put my share of the proceeds(the property that was sold had more than one owner) in a Capital Gain account. At the time of the starting of the account I had duly filled up the required forms and wasn’t asked for anything else. I have ever since bought a flat and tried to invest the amount present in the Capital gain account as per the demand raised by the builder. I have also been outside India i.e on an onsite assignement since Dec 2011.

    Recently I visited the bank for the final payment to be made from my CG account to the new builder(i.e final payment and closure of the account). The bank officials are harassing me now saying that they won’t let me close the account as they want to see the Income tax returns for the last two years and a few other docs related to the sale of my last property. Is this some thing which the bank officials cans ask for? Capital gain is a very relative and a complex concept. Please guide me through this concept with regards to my situation that I have tried to explain above.

    Thanks

    Reply
    • September 21, 2013 at 9:52 AM
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      Hi Samay,

      As per the information provided here, what I can get from the prima-facie is that you are an NRI now as per your residential status, right? In such case obviously bank will raise such demands. Also I understand that there were some immovable property were sold during 2011 for which you opened such capital gain scheme account, then in that case you should have your ITR filed since then.

      Reply
      • September 21, 2013 at 11:24 AM
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        Thanks for the prompt response. At the time of the sale of my property we had concluded using the computation and formulas involved that we actually won’t derive any profit or capital gain from the sale proceeds (Formula – Cost of acquisition for the purpose of Capital gains – ({Cost of acquisition * Cost inflation index of the year of transfer} / {Cost of inflation index of the year in which purchased} ) Link – http://www.connexionsabroad.com/blog/long-term-capital-gain-tax-explained/ ) .

        Now that the bank is asking for the ITR for these 2 years should I file one just comprising of the interest received on the amount deposited in the capital gains account. The interest though alone won’t be enough to make my income reach the minimum threshold required for an income to become taxable in India(commonly refered to as tax slabs).

        Thanks

        Reply
        • September 25, 2013 at 11:36 AM
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          You can. Or alternatively you can meet your assessing officer within your PAN jurisdiction and request for an exemption certificate by providing valid proofs of income for the previous year(s), CG etc. so that this filing process can be avoided and the same can be shown to bank the to release payments. But I can’t say how far this will help.

          Reply
  • September 25, 2013 at 8:23 AM
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    Hi
    I have sold my residential property in Sep 2013 which I had acquired in Sep 2000. I have capital gain of Rs 15 lac. I have residential flat with roof rights. Can I use this amount to construct another floor on my roof to save my capital gain tax under section 54? or whether construction is only valid for house build on own land.

    Reply
    • September 25, 2013 at 11:30 AM
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      Hi Vijay,

      Renovation or extension of old house can not claimed as exemption.

      Reply
  • October 7, 2013 at 9:36 AM
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    Dear sir In my case its 3ed year of Capital Gain account. I have paid the full amount ( 6 Lakh) to the contractor (My father in this case) and asked to complete the construction as per design within stipulated period of 3 years. Rest expenditure on construction which is around 4 lakhs will be paid through Bank Home Loan. Firstly, Request intimate document required to be taken from contractor. Secondly, Will there be a requirement of formal agreement between self and contractor or just house completion certificate from urban development authority will suffice for IT purpose. Thanks

    Reply
    • October 7, 2013 at 11:43 AM
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      Hi Amit,

      From the provided information I am unable to figure out actual issue.

      With regards to IT purpose you need to have completion certificate and payment details that were being made from CG account. Please note, any unutilised funds from the CG account within the stipulated time frame is subject to tax.

      Reply
      • October 9, 2013 at 5:19 PM
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        Hi Soubhagya, thanks for prompt reply, My query was….I opened capital gain account two years & 1 months back and deposited 6 lakhs. As two years are complete, I can not buy house but can construct a house on a plot on my name within balance 11 months. So I paid 6 laks in one go to contractor (my father) and told to construct the house within 11 months. As you answered firstly I will be requiring house completion certificate. Do I have to provide any other document to IT dept ? or only date of transfer and bank statement of self account and father account will suffice thanks

        Reply
        • October 10, 2013 at 5:47 PM
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          Hi Amit,

          As an assessee you don’t need to provide bank details of the contractor, but yes you can have your bank transaction details along with schedule of actual transfer etc.

          Reply
  • October 16, 2013 at 1:17 PM
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    Hi Bhuvaneshwer,
    I with my wife (joint ownership) had purchased a new flat on Apr 2010 which was under construction & got the possession of the Flat by Mar 11. The total amount which I have spent on the flat will be approximately Rs. 32 Lakhs (30.5 Lakhs towards total cost of the property + around 1.5 Lakhs towards the principle paid through the Bank EMI scheme). Now I have decided to sell this property for an amount of Rs. 44 Lakhs. Would like to get your advice on the below mentioned points?

    1. Can I open a Capital Gain account only in my name or it should be a joint account (my wife & me)
    2. What is my profit on the flat after doing the indexation method
    3. What amount of money should be parked towards the capital gain account, the whole amount Rs. 44 Lakhs or only the profit which I have received on the flat
    4. What kind of gain is this Short term or Long term capital gain (Not sure whether we consider the date of purchase of the flat or possession of the flat)
    Thanks….

    Reply
    • October 20, 2013 at 12:42 PM
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      Hi Ravi,

      It’s always a debatable topic. But what I think is, if 100% of cost acquisition is done by you and your wife was just name sake co-owner then you can very well claim benefits in your name.

      Now coming to your questions.
      1. As indicated YES, you can. But if there were any contributions from your spouse side then you should go proportionately.
      2. Basis the registration date I will be able to tell whether it’s LTCG or STCG and then indexation will be applied if required.
      3. If it’s a gain from long term then only profit portion needs to be parked. For STCG the whole profit is taxed as per your slab.
      4. This I indicated in answer # 2.

      Reply
      • October 21, 2013 at 5:39 PM
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        Thanks a lot Bhuvaneshwer, indeed this was a helpful information to me. Now I am slightly worried about the STCG part;
        1. I purchased this flat in Apr 10 (which was under construction) & got the possession on 31 Mar 11 (with the help of Bank loan). I have paid all dues to the bank & my date of Registration (to sell the property) is fixed on 7 Nov 13. Can you please let me know whether this is a LTCG or STCG?
        2. Also if I am going to open a Capital Gain Account (in case if it’s a LTCG), do I have to pay the TDS for the same?
        Thanks in advance.

        Reply
        • October 22, 2013 at 4:40 PM
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          Hi Ravi,

          You need to tell me what was the date of registration for Purchase.

          Answer to you second question, No! there won’t be any TDS whether you incur STCG or LTCG out of the transaction.

          Reply
  • October 24, 2013 at 11:52 AM
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    Thanks Bhuvaneshwer for your quick response. The registration of the flat was done on 25 June 2010.

    Reply
    • October 24, 2013 at 12:52 PM
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      Hi Ravi,

      In this case holding period of the said property stands approx 3 years 4 months by Nov 7, 2013. Any gains arising from sale of the property will be considered as LTCG. If I take Rs. 32 lacs as your purchase price and sale consideration at Rs. 44Lacs then the indexed value of Rs. 32 Lacs will be now approx Rs. 42.16Lacs i.e. (Rs. 32Lacs ÷ 711×939). Thus LTCG will approx Rs. 1.74Lacs i.e. (Rs. 44Lacs – Rs. 42.16Lacs).

      CII: FY 2010-11(711) & FY 2013-14(939)

      Reply
  • October 25, 2013 at 12:10 PM
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    Perfect & thank you again Bhuvaneshwer, so I believe that I have to only park Rs. 1.74Lacs towards capital gain account, right?

    Reply
  • October 26, 2013 at 6:22 PM
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    Hi Sir ,
    we have opened a CG account , now we are purchasing a flat , so for withdrawl the bank will give us DD /pay order or RTGS/NEFT possible from this account. as per bank they are saying they will give only DD / payorder ,which has a heavy portion of commission for making this DD. While i want to save these charges ,so plz clarify RTGS/NEFT possible or not from this account.
    Would appreciate to have guildelines issued by RBI in this regard for banks.
    Regardsm

    Reply
    • October 30, 2013 at 10:54 PM
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      Hi Prashant,

      There is no such rule that such payments has only to be made only through DD/Pay order. You can also make the transfer through NEFT/RTGS also. But this depends on what facility bank offers to you. If your bank doesn’t has such NEFT/RTGS facilities then you have to go with the route of DD/Pay order.

      Reply
  • October 28, 2013 at 12:44 PM
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    Thank a lot for all your support & guidance Bhuvaneshwer!!!

    Reply
    • October 28, 2013 at 5:20 PM
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      You are most welcome Ravi!

      Reply
  • November 10, 2013 at 10:44 PM
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    Mr Bhuvaneshwar: I have read quite a few articles related to CGAS, but yours is exceedingly well-written interms of clarity. I had 1 question:
    Can funds from CGAS be used to buy out the share of other legal heirs (right of pre-emption), and argue that since I have used the CGAS funds to buy out the share an eventually acquire a house, therefore it is completely valid, bearing no further tax implication ?
    Thank You ji

    Reply
    • November 11, 2013 at 12:31 PM
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      Hi Balaji,

      The provision of Capital gains Account Scheme has not indicated clearly something like this. Of course this is a debatable issue. Here I suggest you to take help of a lawyer.

      Reply
  • December 16, 2013 at 1:18 PM
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    My wife will be selling her property which is shared by his brother. The amount from the sales proceed will be deposited in Capital Gains Account. Please tell me that can this amount be used to prepay some of the loan amount for house which is in co-ownership of myself and my wife. the loan is in my name.

    Reply
    • December 16, 2013 at 1:31 PM
      Permalink

      Hi Pramod,

      The rules given under Capital Gains Account Scheme, nowhere they cover that you can close any existing home loan from the funds available in the account. Thus I doubt whether you will get the benefit.

      Reply
  • January 8, 2014 at 11:11 PM
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    Hi
    Facts

    1) Original Buyer (late husband of present owner)/father of present owner) as mother and son both are now co-owners now) bought 4 Katha 10 Lecha land on 04 Sept 1981 for a consideration Amount : Rs 4000 .
    2) On death (11May, 2009) of original buyer land transferred to his legal heirs-wife (X) & son (Y) on 21.5.2011.
    3) Sold part of transferred land measuring 1 Katha 5 Lecha on 8 Jan 2014 for an amount Rs 12,60000. This amount paid by cash.
    4) Both mother (senior citizen) (X) and son (Y) of the deceased are not taxable- below tax slab (less than 2 lakh income)
    Questions
    1) What will be the capital gain tax on this amount (12,60,000). Whether it will be short term or long term capital gain tax (will it be short term because they sold the land within 3 years from the time it was inherited or will it be long term since it is inherited property? If short term / long term How is it calculated?
    2) Will wife and son of deceased have to share the tax equally, as both are now joint holders of the land. I mean the capital gain will be divided between the two 1260000/2=630000 each?
    3)

    Reply
    • January 9, 2014 at 11:53 AM
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      Hi Abrar,

      As per me it will be treated as STCG as the sale happened on Jan 8, 2014 where the property was transferred to mother and son on May 21, 2011 i.e. holding period approx 2 years 8 months only (i.e. less than 3 years). It doesn’t matter whether the property was inherited or client had purchased.

      And yes, any gains/losses have to be divided based on the ratio of their respective ownership.

      Reply
      • January 9, 2014 at 1:48 PM
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        Thanx for the prompt reply;
        1) Son has annual income around 1 Lakh
        Mother (senior citizen) is pensioner with annual income of 160000
        2) Both own the land equally so the income will be shared 50:50

        Now what will be the short term capital gain tax on both, how will it be calculated

        Reply
        • January 9, 2014 at 2:41 PM
          Permalink

          Hi Abrar,

          You need to calculate the indexed value of transfer during Fy 2011-13 and then you need to deduct the same from sale value. whatever profits comes, that has to be divided equally 50:50. And then add these portion of profits to son’s and mother’s income respectively. Now that tax calculation will be as per the normal slab.

          Reply
  • March 5, 2014 at 8:57 PM
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    I sold a land after three years in April 2012. I have not yet submitted my returns for that year yet. is it possible for me to open a Capital Gains Account and deposit the money now, ie before submission of that year’s account? The question is asked because, i came to know that the account should have been opened on the same financial year before account submission….but i have not yet submitted that years account. Your help will be greatly appreciated.

    Reply
    • March 5, 2014 at 10:22 PM
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      Hi Sathish,

      It’s nothing like that until you file your IT returns (even due date is crossed), you have the option open to go ahead and put the funds in a capital gains scheme account anytime and then file returns. What I understand is, you are required to pay tax (including interest on due tax amount) on the capital gain amount since it has not been deposited in the CG Scheme account before the due date of IT return filing date for the AY 2013-14. IT filing due date for AY 2013-14 year was extended to August 5, 2013.

      Reply
  • June 10, 2014 at 3:05 PM
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    I sold a land on which the capital gain is approx Rs.50 lacs. I have used the fund for some

    purpose.Now to save the tax , can I take a loan from the bank and purchase a flat. Will my

    gain be liable for exemption.

    Reply
    • June 10, 2014 at 5:39 PM
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      Hi Tanuj,

      You were supposed to use the gains to reinvest in purchase or construction of house property or invest in prescribed 54EC bonds. Taking a loan and showing it as capital gain being used to purchase house would not be a good idea. Remember! in case you claim by this way, you should not be claiming and principal repayment under 80C and interest deduction under 24b in future.

      Reply
  • August 8, 2014 at 1:25 AM
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    My query is : my father had a land ; flat in his name..as my father expired the property of house and land showed in my mother statement of accounts..in 2012 we sold a land and we got cheque and capital gain of 68 lakhs..we never invested in bonds in year 2012 and we till now never submitted IT returns..for saving ltcg we thought of purchasing ongoing project of residential flat in my mothers name…if we purchase in this financial year..whether we can utilise the ltcg amount in my mother’s name ( as both land and flat was inherently received from my father expiry to my mother and shall we be allowed to purchase fresh house in mothers name)kindly update…we will be thankfull if u can help me out.
    Atishay

    Reply
  • August 8, 2014 at 2:40 PM
    Permalink

    My query is : my father had a land ; flat in his name..as my father expired the property of house and land showed in my mother statement of accounts..in 2012 we sold a land and we got cheque and capital gain of 68 lakhs..we never invested in bonds in year 2012 and we till now never submitted IT returns..for saving ltcg we thought of purchasing ongoing project of residential flat in my mothers name…if we purchase in this financial year..whether we can utilise the ltcg amount in my mother’s name ( as both land and flat was inherently received from my father expiry to my mother and shall we be allowed to purchase fresh house in mothers name)kindly update…we will be thankfull if u can help me out.
    Atishay

    Reply
    • August 8, 2014 at 4:15 PM
      Permalink

      Hi Atishay,

      As per section 54F, you were supposed to get the sale proceeds of the land invested within 1 year prior or within 2 years (3 years if construction) from the date of sell/transfer of the property sold. You could have put it into CG Scheme account if no investment happened by the end of the filing due date for the financial year in which the said property got sold. But it seems nothing had happened. Now I don’t thing declaring the the gains now to take deduction by way of purchase of new property will get you some benefits, rather demand may raise for unpaid tax payment.

      Now the tax liabilities would be in the hands of your mother.

      Reply
  • August 8, 2014 at 5:01 PM
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    Thanks for your reply..since I did not purchased bonds…can my mother purchase new ongoing house project in this financial year 2014 as 2 years within we should show investment and if yes we have recently on April booked a new flat in her name…can we be eligible for saving the ltcg.
    Kindly reply

    Reply
    • August 8, 2014 at 5:28 PM
      Permalink

      Hi Atishay,

      You were supposed to put the amount in CG Scheme account, but you didn’t do.

      Reply
      • August 11, 2014 at 11:08 AM
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        Dear Sir,
        My mother aged 82 purchased a piece of land 27 years ago and sold the land a month ago ( July 2014) The proceeds are in a joint FD with my father. We have 2 options – one to buy an apartment and another to park the funds in CG account. CG amount is 29 lac.
        If we buy an apartment, can we buy in joint name with my father.
        If CG account, how long will be lock in. After lock in, can the money be utilised with NIL tax.
        Kindly advise along with better utilization of money without any tax.

        Regards

        Reply
        • August 11, 2014 at 12:57 PM
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          Hi Madhusudan,

          Jointly? Very much possible. Other co-owners will just act as part owners since the contribution will be done by your mother.

          Money saved in CG Scheme account should be utilised to investment in New Property. Any unutilised amount should be taxed.

          Reply
          • August 13, 2014 at 3:32 PM
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            Thanks for your prompt reply.

            1. What is the lock-in for CG account.

            2. Suppose, I do not buy a property and just park the funds in a CG account. Can we utilize the money for any other purpose after maturity? In that case will it be taxed after the lockin period.
            Do you have any other suggestion to escape tax legally.

            3. Can we buy land from the proceeds as the earlier sale was a land.
            Regards

          • August 13, 2014 at 4:36 PM
            Permalink

            Hi Madhusudan,

            There is no such lock-in terms. But if you opt for term deposit in CG scheme account, it will have maturity terms. As the objective for such account is to utilise the money for investment in new house property, but in case any amount left unused then it will be taxed. Purchase of land will not help you to save tax.

          • August 14, 2014 at 1:20 PM
            Permalink

            Hi
            The index value is not a round figure to invest in multiple of 10000/- for 54EC bonds. Can we round it of to next 10k?

            Should my mother file returns for FY15 in July 2015? This is the first and only income for my mother all these years.

          • August 14, 2014 at 8:16 PM
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            Yes

  • August 9, 2014 at 12:13 PM
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    Are we allowed to pay the ltcg tax with interest for 2 years to government..is this your final outcome / suggestion.

    Reply
  • August 18, 2014 at 12:15 PM
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    Hi

    We have decided to buy REC 54EC bonds. Please let me know where to buy this. We live in Mysore.
    Is it an open ended scheme so that we can buy any time we need.

    Regards

    Reply
    • August 18, 2014 at 5:28 PM
      Permalink

      Hi Madhusudan,

      You can get it at any nationalized bank. Some non-banking company like, Mahindra Finance Ltd, Shriram Transport Finance Ltd etc serve these investment as well. But make sure you check the right investment instrument details before investing.

      Reply
  • August 29, 2014 at 6:10 PM
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    i sold a residential site in sep 2011 and the long term net gains of 48 lacs after indexation have been invested in cap gains a/c by july 2012 before filing the return for that year.

    subsequently , the amounts deposited in cap gains a/c , are withdrawn thro form C and get paid to a builder cum developer .
    But sale and constrn agreement of may 2013 registered and e stamped mentions total cost at 48 lacs which includes the uds where as the registered sale deed dated aug 2014 as per karnataka govt guideline value mentions at 22.5 lacs for the property as a whole .

    What will be the stand of IT DEPT ?
    For the 2 bed room flat of 1200 sq ft , karnataka govt has fixed guideline value as 22.5 lacs
    as mentioned above.
    I HAVE PROOF OF HAVING PAID THE ENTIRE CAP GAINS OF 48 LACS PAID BY ME AND RECEIPTS ISSUED BY THE BUILDER CUM DEVELOPER SUPPORTED BY CAP GAINS PASS BOOK . I AM ALSO SUBMITTING THE RETURNS WITHOUT DELAY .

    Please enlighten me.

    Reply
    • September 7, 2014 at 6:55 PM
      Permalink

      Hi Chudamani,

      This means you have purchased the property at a higher price. That’s it. Since you have all the proofs of true transactions, then there won’t be any problem.

      Reply
  • September 1, 2014 at 10:34 AM
    Permalink

    Hi
    While applying for REC 54EC capital gain bonds, I understand that the entire amount as per sale deed has to be re-invested to come of the tax liability.

    Is there any concession for senior citizens in this investment. Suppose the CG amount is 30lac ( without indexing), should the entire amount has to be re invested or is there any concession.

    Since the CG is through sale of land, is there any rule to attach a copy of the sale deed indicating the amount.

    Also confirm if self attested address proof, Pan card, cancelled chq is enough as enclosures.
    Let me know if any additional has to be done.
    Regards

    Reply
    • September 1, 2014 at 10:56 AM
      Permalink

      Hi Madhusudan,

      As I understand there is no concession for senior citizens. Stated documents are fine, but you need to confirm with the bank, what additionally they want.

      Reply
      • September 1, 2014 at 11:27 AM
        Permalink

        Thanks a lot.
        Your answers to different is very quick and help many readers like me.
        Thanks again.
        Regards

        Reply
        • September 1, 2014 at 10:49 PM
          Permalink

          Hi Madhusudan,

          You are most welcome!

          Reply
  • September 12, 2014 at 7:18 PM
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    Can anyone let me know.. if two brothers are joint owners of a property.. bt one brother is of the opinion that he is not interested in the property.. nd if the property is sold he will not take any consideration.. nd both the brothers name appear on the deed.. so the brother who is not interested in property, is he liable for capital gains in the sale of property..

    Reply
    • September 14, 2014 at 10:48 PM
      Permalink

      Hi Sumit,

      You need some legal advice. As per my view, not interested brother has to pay tax on his share of income.

      Reply
  • September 24, 2014 at 3:29 PM
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    I sold a plot of land on 6th Feb 2014 – after calculation of Capital Gains, some investment in 54EC bonds and paying some tax – a portion of the capital gains ( as appropriated for 54F exemption) has been deposited in CGAS before 31st July 2014.

    Now I intend to purchase a piece of agricultural land (1)and build my residence on it before Feb 2017 – I have NO other land/residential property now. Due to restrictions on purchase of agricultural land I am purchasing th agricultural land on my wife’s name(2). All payments will be through DD’s and though I am paying much more, the value on Sale Deed registration as per indicated guidelines of Karnataka stamps Duty & registration is much lower.(3) All payment transaction are being duly recorded in the CGAS passbook.

    Q1. What are your views/interpretations on (1), (2) & (3) and do you foresee any problems or abjections from IT department?

    Thansk & regards,

    Chetan

    Reply
    • September 27, 2014 at 10:00 AM
      Permalink

      Hi Chetan,

      You said new purchase will be of “agricultural land”, but no deductions will be allowed on that. It should be a residential land and you need to construct house on that. And reinvestment is happening in your wife’s name. Of course it will be no easy to pass thorough AO’s scrutiny (in case comes). I can’t confirm, but the case looks to be attracting a higher chance of scrutiny from IT Dept. Then it’s upto you, how you justify your point.

      Reply
  • March 3, 2015 at 3:14 PM
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    my dadaji is having a capital gains a/c and i am nominee of this a/c. my dadaji past in nov 14 and i clame for it but the problem is all the orignal documents is towards my uncle due to some family dispute he is not giving me passbook and the bank manager is asking me for orignal passbook so what is another way to transfer the amount on my name please help me out.

    Reply
    • March 4, 2015 at 11:22 AM
      Permalink

      Hi Nitin,

      Bank should be asking for passbook. Bank will not understand if there is a family dispute. You have to speak to your uncle or go with a legal procedure. Do consult with a lawyer in such case.

      Reply
  • March 10, 2015 at 3:38 PM
    Permalink

    Hi,
    I opened capital gain account in July 2012 and used the entire amount deposited for house construction. I have the construction agreement, bills, receipts of the payments made.
    Now, I want to know if it is necessary to close the C.G. account or can I leave it open without any remaining deposit? I am asking as it is a lot of effort to take assessing officer signature and then close the account formally.
    Thanks in advance for your reply.
    Regards, Jyoti

    Reply
    • April 5, 2015 at 11:27 PM
      Permalink

      Hi Jyoti,

      I don’t think it is of any cumbersome process. Since there is no balance, bank will surely close the account on request.

      Reply
  • April 2, 2015 at 7:34 PM
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    nice clarifications. i have querry. i have sold my flat in march 2015 with capital gain65 lacs. i had booked a flat with builder in 2012 and had paid about 60 lacs payment. (39 lacs loan from bank and rest my savings). this flat construction is likely by dec2017. from sale proceeds i intend to return bank loan of 39 lacs. i am yet to make payment of 50 lacs to builder in another 24 months.
    can i claim exemtion from capital gain for the amount i will return to tthr bank
    can i claim exemption for the amount to be paid to bilder.
    regards

    Reply
    • April 4, 2015 at 10:04 PM
      Permalink

      Hi Garg,

      In a simple scenario your purchase was supposed to be within 12 months prior to the sale (you got LTCG Rs. 65Lacs). Since the construction is taking time then there is a favorable chance for you to get the exemption claim, but IT officer might call for clarification.

      Reply
  • April 9, 2015 at 6:33 PM
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    Dear Sir,

    I’ve sold a property and will be getting 12 lacs (in white). Long term capital gain will be around 11 lacs.
    I want to put this into CGAS account, but I am confused about the withdrawal thing.
    I read on internet that I need approval of assessing officer before withdrawing. I don’t know who will be my assessing officer.
    1) How do I trace him?
    2) Does it depends on my state?
    3) Can CGAS operated online? I mean if that amount is not used within 3 years of sale, can that amount be transferred online to any other bank account in India without need of approval of assessing officer?

    Reply
    • April 23, 2015 at 11:23 PM
      Permalink

      Hi Yogesh,

      1. Your assessing officer will be in the same city where your PAN jurisdiction belongs to. You can visit to IT dept and the ward to know who is your AO.
      2. Not necessarily in your state, but based on PAN jurisdiction data.
      3. No

      Reply
  • May 15, 2015 at 4:43 PM
    Permalink

    Hi. We have deposited the proceeds of a flat sale in a capital gains account. We are investing in a flat for 90 lakhs, as shown in the sale agreement. However, the flat is being registered at 75 by the developer.
    1. Can the bank refuse to release more than 75 lakhs, even though the sale agreement is for 90?
    2. Do I have to submit the draft of the sale deed to get the money released? I have already submitted the draft of the sale agreement to get the initial amount, which as been released by the bank.
    3. If the bank does not release the extra 15 lakhs, is there any way in which I can utilize the capital gains amount, i.e., for home improvement for the property that I am buying?
    Thank you very much!

    Reply
    • June 16, 2015 at 7:58 PM
      Permalink

      Hi Lavanya,

      First thing is, if the money invested in CG Scheme account is out of sale of residential house property then you can invest only LTCG amount, but not necessarily full proceeds (well I am not sure if 90Lakhs there is either Sale Proceed or LTCG amount). If rest 15 lakhs is beyond LTCG amount then bank should not stop you from withdrawing. Most bank do not put any restrictions, if your bank does then take CA letter declaring no tax due and submit at the bank. In another case if this is part of LTCG amount then you have to pay tax and show proof of tax paid challan to take the money out. Improvement cost might not be allowed in this case.

      Reply
  • May 23, 2015 at 7:50 PM
    Permalink

    Hello I have a long term capital gains from sale of inherited property . can I use the gains to pay for a residential property in name of my wife. We have already paid some installments in the past and want to use the balance payment from the capital gains. The house will be transferred in October 2017 and the capital gains happens in May 2015.
    I

    Reply
    • June 13, 2015 at 9:17 PM
      Permalink

      Hi Sinha,

      1st thing is purchase of the new property should have happened after May 2014 only, but not before if you wish to save capital gain tax and 2nd thing is new property should be in your name.

      Reply
  • July 17, 2015 at 7:06 PM
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    Hi,

    Can i spend amount from CGAS withdrawing in cash? Is there any rule posing restrictions?

    Reply
    • July 26, 2015 at 12:27 PM
      Permalink

      Hi Rajesh,

      No! Amount invested in this account should be used either for construction or purchase of residential house property.

      Reply
  • April 27, 2017 at 1:26 PM
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    Please suggest…. Amount deposited in CG scheme account, can be used for purchase of bonds 54EC ? As Assesses has changed his decision and does not want to buy /construct hose property at the same time want to invest in NHAI bonds. Period of six months from date of transfer of property is not expired.

    Reply
    • May 2, 2017 at 7:41 AM
      Permalink

      Hi Ashok,

      You can not withdraw funds from CGS account for the purpose of purchase of 54EC Bonds.

      Reply

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