Capital Gain Exemption

Income Tax Forms & Documents
21

Me and My father bought tw flats combined in to one flat in 2002 for Rs 423000/-. My father had not contributed during the purchase. We sold the same in 2022 for Rs. 3000000/-. Amount received in Joint account where my name is first holder and my father is second holder. Capital gain comes around 1625000/-.Want to invest in 54EC bonds. Do I need to put my fathers name as joint holder name while buying 54EC bonds. Or can I show entire income as mine and buy bonds in my name only. My fathers age is 85 years his pension income is 34000/- per month. I do not want to put tax burden on him as regards his age and health.

22

Hi @apambekar

An assessee who has sold Long Term Capital Asset like land or building or both can claim exemption by investing in NHAI or REC Bonds. The amount of exemption will be lower of:

  1. Cost of NHAI or REC Bonds
  2. Capital Gain on sale of land or building or both

If you invest in 54EC bonds, then it should be purchased in the joint holderā€™s name, as you and your father both. Since the consideration is received in a joint name, and if you only make the purchase in your name, then the share of your fatherā€™s consideration becomes liable to tax.

If you invest as joint holders, then you will be able to claim the entire amount of as exemption.

Hereā€™s a read on Section 54EC of Income Tax Act on Sale of Land/Building- Learn by Quicko for your reference.

Hope this helps.

23

can they both purchase in their separate individual names as per their share of money ?

24

Hi @HIREiN

Yes, they can purchase individually, as per the capital gains share.

25

Hellow !

Thank you so much. It was helpful.

1 Like
26

Hi, I have a related query. After claiming 54EC LTCG exemption, 54EC bond investment is to be detailed in Table D of ITR2. For the following case:

  1. Property sold on 12/12/2022
  2. Invested in bonds on 31/05/2023
    ITR filing doesnt allow me date beyond March 31, 2023. While it should allow upto 6 months of sale or last date of ITR filing (31 July 2023). Can you or anyone help, please.
27

in the case of Joint owners, the first holder of an account is considered as an owner of the account i.e. his/her PAN will be linked to the profits made on that account. Hence, the first holder will be liable to pay taxes on the profits earned.

In case, whoever is the first holder of the account will be taxed for profits earned from an account.

query :

can the income tax department hold the 2nd holder liable ; if the 1st holder default in payment of the tax ?

28

Hey @HIREiN,

No, the liability of payment of taxes remains with the 1st holder.