Section 54EC - Exemption on Capital Gains from Land or a Building

Income Tax Income from Capital Gains
21

Hi Shrutika ji. Thanks. They have modified the Utility and I was able to file my return.
But I have another issue.
I got message that Return is defective (u/s 139(9)). Reason: Gross receipts in AS26 are higher than reported under the Head Income for which TDS is claimed.
Now issue is the following: We sold a plot in joint holding. We were paid equal amount (Rs 32.5 Lacs) but Buyer deducted TDS only from my share and also showed full amount (Rs 65 Lacs) against me as payment. While filing, I reported the payment I got and showed TDS as Rs 65000. Thats why they sent this ā€œdefective Returnā€.
What I am supposed to do? Please advise.

22

Hi @kbaliyan

It is better to take professional help in case youā€™ve received a notice from the ITD.
You can book a MEET for Income Tax Notice Plan for Individuals.

23

Thanks, Shrutika ji. I plan to disagree and provide details of payments received by two sellers. Also that TDS was deducted on full payment but only my PAN was used. Payments are mentioned in sale Document. Hope that works.

24

we can also save on taxes arising from capital gains on sale of shares by investing in some govt. bonds under what section does that come?

25

My wife inherited 1/3 portion of house built by her father in 1978 about five years back in 2018. It was sold by her in November 2023 .

If she reinvests in property or opens a capital gains account to reinvest in property within 2 years or invests less than 50 lakh rs in capital gains bond 54 ec of railways,pfc,nhai etc will she be eligible for 54 ec benefits of capital gains exemption or not

Below are eligibility criteria for 54 ec exemption (paytm website)which states :

  1. Investment in post-April 1,

2000 assets: Individualsā€™ long-

term capital assets should

have been purchased after April 1, 2000. Investments made in assets before this date are not eligible for section 54EC tax incentives.

What does it mean :

a) the individual should have sold property after 1 April 2000

Or

b)tax exemption seeking individual should have reinvested in new property after 1.4.2000.

Or

C) the house sold should have been purchased after 1.4.2000

Bank bazzar explains the same criteria of eligibility as:

ā€¢ The transfer of the long-term capital

asset in question should have taken

place post April 1st 2000

what is its meaning

a)the individual claiming capital gains tax exemption should have sold property after 1 April 2000???

Or

the house sold should have been purchased after 1.4.2000

I will be highly obliged if you can enlighten me if my wife will be eligible for 54 ec benefits of capital gains exemption

1.House built in 1978 by her father

  1. She inherited 1/3 portion in 2018 app

  2. She sold her share in less than 50 lakh rs in November 2023.

If eligible please also advise

1.She will be eligible for purchase of upto 50 lakh capital gains 54 ec bonds & not 1/3 of 50 lakh

  1. If she does not wish to reinvest in property is there any method other than bond purchase & investment in manufacturing msme to avoid capital gains tax?

Thanks & regards

Sanjay

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26

Hello @Sanjay_Rahul,

Your wife can claim the capital gains exemption under section 54EC by investing in the bonds or under section 54 by investing in a residential house property.

The condition is to sale the property after April 1, 2000. Hence your wife can claim the exemption as she has sold the property in November 2023.

Read more on: Section 54EC and Section 54

Hope this helps!

27

I have 50decimal inheritance land from my father in my home town, I want to sell 20decimal of land this year and invest the capital gain amount in 54ec bonds. And rest 30decimal property will sell in 2025 and want to invest in 54ec capital gain bonds. Is it possible?

28

Hey @nazmul,

Yes, you can do that. However, just keep in mind that the total investment amount cannot exceed ā‚¹50 lakhs during the current financial year and the subsequent financial year.

Hope this helps!

29

Topic-1) Subsequent financial year means? Letā€™s assume I have 50decimals land and I sold 20decimal of land on Decemberā€™22 and rest 30decimal of land does not sell on Decemberā€™23. I will sell this particular property of 30decimals on after 1st Aprilā€™24. Then I full fill the 54EC section benefit.
Maā€™am main Hindi main continue kar raha hoon. Different land sell karne se har financial year main benefit le sakte hain aur same land sell karne se bitch main 1year na gap lena hoga?

Topic-2) land sell karke full sale amount ka land le sakte hai?

Topic-3) 70lakh na land sell kiya toh 50lakh 54ec main air 20lakh main new flat/land le sakte hai?

30

Hello @nazmul,

Hereā€™s the answer to your queries:

  1. Subsequent FY means the immediate next FY. The investment in the 54EC bonds should not exceed ā‚¹50 lakhs for the current FY and subsequent FY.
  2. Yes, you can invest the entire sale proceeds in the land.
  3. No, you cannot claim both the exemptions simultaneously.

For further queries, you can book a Meet using the link below, where a tax expert will connect with you and help you with all your queries.

31

1.) Maā€™am mainne ek land ko sell kiya hai 20/12/22 main aur capital gain amount ko 54ec ka benefit le liya hai. Ab main aur ek land sell karna chahta hoon aur 54ec ka benefit lena chahta hoon,toh main kab land ko sell karu? 1/4/24 ke baad kisi bhi month main sell karke 54ec bond main invest kar sakta hoon?

2.) Main jis buyer ko land sell kar raha hoon wahi buyer sabse land purchase karke chota chota plot banake sell kar raha hai. Main mera land usko sell karke unse plot purchase kar sakta hoon? Pura sell amount ka plot purchase kar sakta hoon with stamp duty and registration fees? Aur ITR main konsa section main dikhana hogs?

3.) YouTube main bahat sare CA bolte hai ki current FY year main ek saath 54ec & 54f ka benefits le sakte hain,? Agar le sakte hai to kaise calculation kare? Agar eksaath nahi le sakte toh current FY main 54ec main upto 50lakh aur next FY main 54f main pura sale amount invest karna hoga?

32

Hello @nazmul,

Hereā€™s the answer to your queries:

  1. To claim benefit of 54EC, you should sell the land after 01.04.2024 as mentioned in the case stated.

  2. There is no section to claim exemption for sale of land and investing in land. You will have to show Capital gain on sale of land and pay tax accordingly.

  3. You cannot claim 54EC and 54F simultaneously, on the same property sales.

Also your queries seem to be quite personalised, we would suggest you connect with a tax expert using the link below who can advise you properly.

33

Lets say we have a capital gain of 10 lac which is long term capital gain - One option to avoid capital gains tax is to invest in another real estate property but can we invest another assets like listed companies shares, gold or diamonds etc and get exemption from ltcg tax?

Also I am reading about 54GB - tax benefit - it says if you invest net consideration in to eligible companies shares - you can avoid paying ltcg tax - does this talk about listed companies on NSE or BSE or it is talking about we starting a new company and invest the ltcg in to our own new start up?

Also just read about 54ee - but can not find which funds are eligible to claim exemption under section? can you give an example of fund?

34

Hey @curiousvi,

In the case of exemption 54GB, the exemption is provided if you invest in eligible startups and this does not apply to listed companies. Hereā€™s an article that explains these conditions in detail.

Moreover, in the case of 54EE, the central government has not specified any eligible funds/bonds yet on which you can claim the exemption.

You can alternatively consider investing in 54EC bonds(if the gains are from land or building) to claim an exemption. Hereā€™s a read on section 54EC..

Hope this helps!

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