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Capital Gain Bonds – The BEST way to save Capital Gain Tax

Capital Gain Bonds
Capital Gain Bonds

Capital Gain Bonds is the best way to save long term capital gain. I will explain it later. The exemption through capital gain bonds is available u/s 54EC. These bonds are issued by NHAI and REC. You can invest through any of the nearest bank branches. Almost all the leading PSU and Private banks issue capital gain bonds. The value of one bond is Rs 10,000. Therefore, you can invest only in multiple of Rs 10,000. In case, your capital gain is Rs 2,37,000 then you should buy 24 bonds worth Rs 2,40,000. The credit rating of capital gain bonds is AAA i.e. highest credit rating. To hedge risk, if i have to buy 24 bonds then i will buy 12 each of NHAI and REC. If you have a demat account then you can buy in a demat form instead of physical bonds. It is always good to hold in electronic form.

The maximum investment allowed during the financial year is 50 lac. In short, you can buy maximum 500 bonds during the financial year. If the capital gain is high then as i shared in my previous post, Capital Gain Deposit Account Scheme that you can invest partial long term capital gain in Capital Gain Bonds. The date of allotment of the bonds is last day of the month during which the amount is deposited in the bond issuer’s collection account. For example, you deposited a cheque on 5th Jan and it is cleared on 9th Jan. The date of allotment, in this case, will be 31st Jan.

The capital gain bonds have a lock-in period of 3 years. Premature withdrawal is not allowed. The bonds are non-transferable and non-negotiable. You cannot avail any loan or advance against capital gain bonds. If you avail loan or advance against bonds then exemption claimed against the bonds will be revoked. The investment and maturity amount of bonds are same i.e. if i invested Rs 2,40,000 then i will receive the same amount at maturity. An important point to note is that upfront you saved 20% LTCG tax. In short, investment of Rs 2,40,000 actually means an investment of Rs 1,92,000 only. The interest of 6% is credited on 1st April every year. The interest is taxable. The unpaid interest will be paid at the time of maturity.

You can invest in capital gain bonds within 6 months from the date of transfer of old property. Here i would like to share interesting ruling of Income Tax Tribunal. The income tax act mention “Month” instead of “Days”. Therefore, Six months start from the end of the month in which the capital gain arises. Assuming i sold the property on 10th Dec, therefore, i can invest in capital gain bonds till 30th June i.e. six months period will start from 1st Jan :). In short, you can invest within 6 British Calendar Months instead of 180 Days.

Another important point is on maximum investment in capital gain bonds. Before the budget 2014, there was a loophole in the system. The taxpayer whose capital gain was more than 50 lac used to sell the property on or after 1st Oct. Assuming, i sold the property on 10th Oct 2012 and the capital gain was 70 lacs. In this case, i had 6 months to invest in capital gain bonds i.e. on or before 10th April 2013. The max limit during FY was 50 lac. Therefore, i will invest 50 lac  in Mar 2013 and balance 20 lac on or before 10th April 2013. In short, i claimed an exemption for full 70 lacs through investment in 2 tranches. Now there are two restrictions (a) Max investment during the financial year is 50 lac and (b) Max investment from the sale of an asset is 50 lac. Therefore, if you are planning to sell more than one property during the financial year and invest in capital gain bonds then please do your calculations.

Capital Gain Bonds – The biggest advantage

The biggest advantage of capital gain bonds is that you can invest long term capital gain from Commercial Property, Non-Agricultural Land, and Under Construction property. I have observed that many clients are more inclined to claim exemption u/s 54F. In short, capital gain from the non-residential property is exempted if a taxpayer buys residential property one year before or two years after the transfer of old property. Alternatively, you can construct new property within three years similar to sec 54. There is a catch that this exemption is available if and only if you own only one residential property on the date of sale of old property excluding the one bought to claim the exemption.

The biggest drawback of section 54F is that instead of capital gain, you need to invest entire sale proceeds in claiming the exemption. For example, if i sold a property for 1 Cr and capital gain is 30 lacs. Depending on the status of the property, the investment amount will vary. If the property is residential then i need to invest only 30 lacs in a new property to save LTCG. On the other, if the property is under construction/non-agricultural land/commercial property then i need to invest entire 1 Cr to claim exemption u/s 54F. In case, i invested, half of 1 Cr i.e. 50 lac then capital gain exemption will also be reduced in same proportion. Therefore, i need to pay capital gain tax on 50% of 30 lacs i.e. 15 lacs and 15 lacs capital gain will be exempted.

Now, assuming i decide to invest capital gain of under construction/non-agricultural land/commercial property in capital gain bonds. In this case, i need not invest entire sale proceeds i.e. 1 Cr in capital gain bonds. I only need to invest capital gain of 30 lacs in claiming 100% exemption. Therefore, i am free to utilize balance 70L. This is the biggest advantage of capital gain bonds. Besides this, you can get double-digit returns even in the highest tax bracket. Another major plus point. Let’s check out.

Double Digit Returns from Capital Gain Bonds

Based on my experience, the major resistance why taxpayer doesn’t prefer capital gain bonds is 6% taxable interest. It is not the right way to calculate returns. The taxpayer forgets that for every Rs 100 invested in bonds, upfront he is saving Rs 20 as LTCG tax. In short, net investment is Rs 80 only. Therefore, another way to look is that you will invest Rs 80 and maturity amount is Rs 100. On top of it, you will get the taxable interest of 6% or post-tax interest of approx Rs 4 in 30% bracket. The post-tax return in 30% income tax bracket is 10.29%. The pre-tax return is 14.71%. Can you generate a double-digit return from property investment? In the current scenario, the answer is NO. Therefore, it is a financially wise decision to invest capital gain in capital gain bonds. The only limitation is a maximum limit of 50 lacs. Hope you liked the post.

Copyright © Nitin Bhatia. All Rights Reserved.

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Guest
Guest
8 years ago

Nitin

Your posts are informative but its getting complex. The reason I liked your posts in the past was because you provided illustrations minus the jargons.

While I appreciate the amount of effort and time u put in, I request you to put clear illustrations for ALL scenarios in complex matters such as lgbt above. This helps understand the various laws better rather than reading long paras. Some animated examples would also be great.

Just a feedback. Love your work otherwise. I have also availed paid service from you in the past.

Thanks.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Guest

Thanks for feedback. I will be careful in future. I try to explain in simplistic way but sometimes topic itself is very complicated. Hope you will understand :). Thanks again for valuable feedback.

editnicheapple com
editnicheapple com
8 years ago
Reply to  Nitin Bhatia

Dear Mr. Nitin Bhatia,
I’m selling to my sister my portion of a residential property inherited from our father. I’ve found that buying capital gains tax saving bonds is the best investment of the proceeds, which come to nearly the maximum limit for investment in the bonds. I am not able to find out exactly whether NHAI and REC bonds are still available. Would you please clarify as early as you can? Also, I believe that long-term capital gains applies to this deal (the property was bought by our father in 1974). Am I right? Waiting eagerly for your reply. Thanks. SCV Sarala

Nitin Bhatia
Nitin Bhatia
8 years ago

NHAI and REC bonds are available as i shared in my post. You may check with scheduled bank. Your understanding is correct, capital gain is long term capital gain.

editnicheapple com
editnicheapple com
8 years ago
Reply to  Nitin Bhatia

Such a relief to know that the bonds are still available. Thanks for the quick reply, Mr
Bhatia.

Clive Sinclair
Clive Sinclair
8 years ago

Dear Nitin,
Recently my Parents have sold their property consisting of a bunglow with land. Land was bought in 1980 for Rs 2L. House was constructed using HDFC LOan for Rs 3L in 1985. Post that various changes in interior was done like changing flooring, toilets, painting (Interior/exterior) etc. In Jan 2016, the property is sold for Rs 85L. No brokerage.
1. How do we calculate Capital gains.
2. How do we save CG Tax. A new property may not be bought due to old age of parents. Idea is to use the money to live and take care of themselves at their wish.
3. Any other suggestions to save tax and create a regular income.
Thanks in adv.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

1. Please check my following post for calculation
https://www.nitinbhatia.in/personal-finance/capital-gain/
2. Capital Gain Bonds is the best option as i explained in post on this page.
3. They can invest in post office senior citizen savings scheme. Please check following post
https://www.nitinbhatia.in/personal-finance/senior-citizen-savings-scheme/

Clive Sinclair
Clive Sinclair
8 years ago
Reply to  Nitin Bhatia

Thanks. After using indexation and Rs 50L for CG Bonds, I am still left with LTCG. Tax@20 on balance LTCG is Rs 8.5L. Is there a way to save this Tax by investing into any other scheme?
Secondly, we have no proof of construction cost in 1985 of Rs 3L. Also we did improvements like changing of flooring, relaying of roof etc for which there are no cost records. So how do I prove these costs whic come to Rs 1.32 L..

Pl advice.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

1. Only other option is property purchase
2. You need bills else you cannot claim deduction
3. I could not understand why you want to do that.

Clive Sinclair
Clive Sinclair
8 years ago
Reply to  Nitin Bhatia

Thanks.
I want to go for (3) as I don;t have proof of construction cost. It is obvious that a house can;t be built wout funds. So If I get valuation done, will that be acceptable for construction & improvement costs?
What else is option in absence of bills.
Also we had taken a bank loan of Rs 80k for construction from nationalised bank which was repaid and IT deductions claimed. WIll that help as some proof?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

It is subjective. IT department may or may not accept your justification. As you availed loan of 80k therefore on safer side, you may consider 80k towards construction.

Clive Sinclair
Clive Sinclair
8 years ago
Reply to  Nitin Bhatia

OK. Thanks.

Lakshmanan Srinivasan
Lakshmanan Srinivasan
8 years ago

very good suggestion. I feel it is better to invest in Capital gain deposits in banks, where the gain is with in 10 Lakhs.

Kapil Goel
Kapil Goel
8 years ago

Hi Nitin Ji,

I sold a land at 35L and purchased a flat of worth 37L (actual market value).
Registered the flat at 31L (as per guidance value) in the same month.

Do I need to purchase the Long Term Capital bonds of 4L worth?

Thanks in advance.
Kapil

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Kapil Goel

The capital gain is on sale of land. You can check following link

https://www.nitinbhatia.in/personal-finance/capital-gain/

Sujal Maniar
Sujal Maniar
8 years ago

can I calculate the Long term CG on sell of property @10% (without indexation) and then invest the gain amount in 54EC ??

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Sujal Maniar

No

Clive Sinclair
Clive Sinclair
8 years ago

Hi, I have sold a property. Deal was done in Dec’15 and buyer paid a downpayment of 10% of Sale price by RTGS. Balance 90% was paid in May’16. Stamp duty & Regn was also done by buyer in May’16 with me as seller. Buyer also deducted 10% TDS in Dec’15 and in May’16.

For filing IT Return, How do I show this Txn?

1. Do I show Full consideration in FY16-17?

2. I show 10% as Rxd in FY14-15 and balance 90% in FY16-17?

3. How do I calucluate CG then?

4. If I am using Sl No 2, then shall I show CG also separately?

5. Suppose my CG is Rs 60L and I will be investing Rs 50L in NHAI bonds and will pay CG tax on Balance. So Can I buy NHAI for Rs 10L in FY15-16 and Rs 50L in FY16-17?

Pl advice. Regards

Clive Sinclair
Clive Sinclair
8 years ago
Reply to  Clive Sinclair

Sorry. Buyer did 1% TDS.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

TDS can be adjusted against capital gain.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

1. As the property is sold in FY 2016-17 therefore you will report the same in ITR for FY 2016-17.
2. It is not clear where you want to show
3. As i shared transaction is completed in FY 2016-17 therefore you will consider FY 2016-17 for the purpose of calculation of CG.

4. NA
5. No it is not feasible.

Clive Sinclair
Clive Sinclair
8 years ago
Reply to  Nitin Bhatia

Thanks.
A. In Pt 2, I wanted to know how to show the Advance Rxd from Buyer which is 10% of Deal value. As Adv is Rxd in FY 15-16 but balance payment is rxd in FY16-17, shall I show full consideration in FY16-17?
Had deal got canceled, I would have to refund the advance, So I feel it should be shown in FY16-17 when deal is completed.
B. As I am 77Yr Old, maximum I can save is Rs 50L in CG Bonds. Is there any investment option available for balance CG above Rs 50L or only investment in new property is option?
Pl advice now.
Regards.

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  Clive Sinclair

A. You have not mentioned whether you are buying as an individual or company. If you are individual you can declare full consideration value in FY 16-17
B. Only options are capital gain bond or purchase new property.

santosh kumar
santosh kumar
8 years ago

I have a client who sold some non residential properties. He does not want to pay tax .please tell the max investment in Tax saving bond

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  santosh kumar

50L

agupta
agupta
8 years ago

HI for investing in capital bonds in rec for fy16-17, do i have to invest in “REC 54 EC CAPITAL GAINS TAX EXEMPTION BONDS–SERIES X” as they got extended from last year? I will get benefit under fy16-17 right?

Nitin Bhatia
Nitin Bhatia
8 years ago
Reply to  agupta

That’s correct. It is extended till March 31, 2017.

Rohant
Rohant
7 years ago

Hello Nitin Sir,

I have a query regarding investing in CGBonds and CGAS both.
my father just sold his NA land bought in 1984, this month for 94,00,000 INR.
we got 75,24,000 as check payment and 18,00,000 as cash (buyer could give only 75.24 lac white).
(includes TDS deducted 1%, so bank transfer was 75240000.)
Now my father wants to give 4 of his children some part of this each.
probably he will give 2 daughters 10lac INR each, keep 10 lac for him & mother and give remaining 32 lac INR each to two sons.
out of total amount the minimum amount which i suppose should be invested in CGbonds would be my sister`s and parents part. (since this amount will not be utilized by the beneficiaries soon.)
i.e 30 lac INR.
Questions:
1. Can my father invest 30lac in CGBonds and remaining can be utilized for residencial property purchase?
i.e. investments in both CGBonds and CGAS account is allowed?
2. He does not own any residencial property as of now, so can he buy two 1 BHK on his names and gift them to two sons?
3. Since residential property to buy is not identified yet, can he deposit whole 75.24lac INR in CGAS account as of now and before the limit of 6 months for investing in CGbonds expire, i.e before 1st Feb 2017, complete the residencial property purchase, and move the funds remaining after residential property purchase to CGBonds account?
in short, can the amount from CGAS account be used/transffered to CGBonds account?
4. reason for question 3 is, I want to maximize my father`s funds, and if we can do so as mentioned in question 3,
then the CGAS account funds can be fixed deposit now to earn higher interest untill residencial property is identified and purchased by Jan 2017.
Or
can he keep the proceeds in his savings account as it is and book and FD till End of Jan 2017 and earn higher interest and
by Jan end decide how much to invest in CGBonds after realizing the residencial property purchase amounts? is this allowed?
5. Property rates today are very high in my area, so 32lac INR might not be sufficient to buy a 1BHK,
so can me/my brother be a joint owner/purchaser in new property where additionl amount is invested by me/my brother?
in this case what proportion of new sale price to capital gains from original sale would be applicable and how can we minimize(make it zero) my father`s CG tax liability in such scenario?

Thanks & Regards,
-Rohant

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Rohant

It is too long query and require detailed explanation. I suggest you to limit no of queries to 2-3 queries and share in concise manner. Alternatively, you can opt for paid one time advisory service.

Rohant
Rohant
7 years ago
Reply to  Nitin Bhatia

Thank you Nitin ji for your reply,
I would definitely like to opt for paid advisory in near future as I need to claim TDS1% while filing IT returns for current year for father.
before that I will simplify the query and reduce the questions.
Even if we dont go in my case details, In general, what would be your opinion on below.
1. Can my father invest in CGBonds(50lac) and keep CGAS(remaining 25lac) account to purchase flat?
2. Father does not own any property on his name as of today.
Can he buy two separate flats on his names and gift them to two sons?
3. Can he put the land deal sum in normal savings FD before investing in CGBonds and residential property?
4. Can me/my brother be a joint owner/purchaser in new property where addition amount is invested by me/my brother?
in this case what proportion of new sale price to capital gains from original sale would be applicable and how can we minimize(make it zero) my father`s CG tax liability in such scenario?
Please let me know answers to these queries, so that i can take further steps for paid service.
Please share your email ID, so that I can communicate further for paid advisory.

Thanks,
Rohant.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Rohant

1. It is possible
2. He can buy 2 properties but capital gain exemption can be claimed only for one property
3. Yes but he need to invest capital gain in Capital Gain Bond and deposit in Capital Gain Account as per respective timeline
4. It depends on property value and proportion of ownership

Clive Sinclair
Clive Sinclair
7 years ago

In Recent budget, FM had announced that Exemption from capital gains tax will be applicable if the LTCG proceeds are invested in units of specified fund as may be notified by the Central Government. The investment in the units of such fund shall not
exceed Rs 50L.
My query is as below :-
1. Please share the list of such funds where investment can be made to save LTCG
2. Can I invest Rs 50L in Capital Gain bonds & rs 50L in above funds to get total exemption of Rs 1Cr?
Thanks

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Clive Sinclair

The budget introduced 2 new options i.e. section 54EE (fund of funds that will invest in startups) and Section 54GB (direct investment in eligible startup).

As per my knowledge, govt has not declared any eligible funds/startups for investment to claim exemption.

Balaji
Balaji
7 years ago

Dear Sir,

I bought a residential individual property on 20-Nov-2013, which has Ground Floor and First Floor. Ground floor was registered in my name for 40 Lakhs and First floor was registered in my wife name for 40 Lakhs. Now, i am planning to sell this property after 21-Nov-2016 to be under LTCG [3 years]. The buyer is willing to purchase the property for 1.5 crores [75 Ground floor +75 first floor] and insisting that he will pay the entire amount in cheque. Please advise on the Capital gain ? Also please let me know, will i incur any loss by getting entire amount in cheque?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Balaji

You may check my following post on how to calculate long term capital gain
https://www.nitinbhatia.in/personal-finance/capital-gain/

ravish
ravish
7 years ago

Sir,

Couple of queries,

1. I have sold a land which was part of a group housing society but any house/apartment was yet to be constructed on it. So will it be considered as a residential property since it was part of an housing society and this will come under Section 54 or will it be considered under Section 54F. This is important for me since I had more than one residential property at the time of sale of this land.

2. Also, in case it comes under section 54F and LTCG exemption is not available to me, I understand from your above post that I can invest in Section 54EC ( amount is less than 50lacs). Only query is that I get a tax exemption right now and this gets locked in bonds for 3 years. But what happens to my money after three years and will it become taxable at the time of maturity?

Regards,
Ravish

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  ravish

1. As the land/plot was part of group housing society therefore it will be considered as residential property only.
2. The interest received will be taxable in your hand but the maturity amount after 3 years will be tax free.

Sunny
Sunny
7 years ago

Hi, If we are selling multiple residential properties then entire amount we have to deposit in capital bonds or only the capital gain amount to save tax? Please advise.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Sunny

Only the capital gain. For example, if you received 1 Cr and capital gain is 20L then you need to invest only 20L in capital gain bonds.

Jayant Chawla
Jayant Chawla
7 years ago

Scenario is like i’m planning to sell off a residential plot and move to the same amount to shares of non-listed company established in 2014 (for this specific purpose) which owes a industrial property.

Residential plot was bought in year 2002 and sale year would be 2016.
Purchase of shares would be executed as soon as the residential plot is dispersed.

Kindly suggest can i get the any exemption over the same under any act like 54EE / 54GB, etc?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Jayant Chawla

There are certain conditions being laid for the investment of capital gain in “eligible business” and “eligible start up” for claiming capital gain exemption. If the company identified by you qualify as eligible business or eligible start up then you can claim capital gain tax exemption against the investment.

Jayant Chawla
Jayant Chawla
7 years ago
Reply to  Nitin Bhatia

Hi, can you please elaborate “eligible business” and “eligible start up”

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Jayant Chawla

It cannot be explained in comments section. I will share a detailed post on section 54EE and 54GB in near future.

Rajarshi Biswas
Rajarshi Biswas
7 years ago

Dear Sir,

I have two queries –

1) My father has sold one property this year amounting 13 lacs which he has bought in the year 1976 @ 3500/- only for which long term capital gain comes around 11.50 lacs. So if he intends to invest in LTCG bond of REC/ NHAI from my understanding of your writing he has to invest 11.50 lacs in REC/NHAI bond. But if he wants to buy residential property/ construct a residential property he has to invest all the money i.e. entire 13 lacs for tax exemption. Please explain.

2) Is there any provision for premature withdrawal of the LTCG bond amount? I mean to say if there is any penalty amount to be paid in case of premature withdrawal of the amount?

Awaiting eagerly for your reply.

Nitin Bhatia
Nitin Bhatia
7 years ago

1. No. In both the scenarios he has to invest only capital gain amount i.e. 11.50L.
2. There is NO provision of premature withdrawal. The money will be locked for 3 years.

Rajarshi Biswas
Rajarshi Biswas
7 years ago
Reply to  Nitin Bhatia

Thanks Sir for your reply.

Parthasarathy K Sriraman
Parthasarathy K Sriraman
7 years ago
Reply to  Nitin Bhatia

Nitin, what if the invested person dies in between 3 years of bond time? Whether the legal heir can claim the principal & interest.

Nitin Bhatia
Nitin Bhatia
7 years ago

Bonds can be transmitted to the legal heirs of the deceased.

Aniruddha
Aniruddha
7 years ago

Hello Sir,

I sold a flat on 20th May 2016 in which my father was Co-Owner.

In Aug 2016, Using amount received from sale of flat + Home Loan, I have purchased a new flat in my name only

1. What will be tax implication of LTCG to me and my father?
2. Can we save on tax on LTCG? How?

Aniruddha
Aniruddha
7 years ago
Reply to  Aniruddha

Sir, i would like to simplify —

I sold a flat on 20th May 2016 in which my father was Co-Owner.
Total LTCG = Rs. 176347

In Aug 2016, Using amount received from sale of flat + Home Loan, I have purchased a new flat in my name only.

1. Can I Claim for 100 % LTCG exemption?
2. Is my father and me have to pay tax on LTCG?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Aniruddha

1. No. You can claim LTCG exemption only in the proportion of ownership in the sold property.
2. You can claim exemption as you invested in property but your father has to pay capital gain tax.

VISHAL GUPTA
VISHAL GUPTA
7 years ago

Hi..
As per the IT Act the time period to invest in bonds is 6 months. But the income tax department count days and does not accept our reply as u explained above. Even in the case of Hindustan Unilever Limited vs Deputy Commissioner, the IT dept considered dates rather than month. Please advise on this.
Further the date of payment will be the date of issue of cheque or the date on which amount is deducted from account..?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  VISHAL GUPTA

As i mentioned, Income tax act mention months not dates. Therefore, the explanation shared by me is correct. Under negotiable instrument act, the date of payment is date on which cheque is handed over to seller. Normally, date of issue of cheque.

Atul Kumar
Atul Kumar
7 years ago

Capital Gains = 60 lacs
Can I invest 50 lacs in bonds and park the rest (10 lacs) in CG account and invest that money in a new property within 2 years? And does it have to be residential?
Thank you.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Atul Kumar

You can do that. You cannot invest capital gain in commercial, plot or agricultural land. In short, it should be residential.

Ram
Ram
7 years ago

Sir, In case if i am selling my property on 25-Mar-2017, will i get 6 months time to invest in CG bonds ? or Do i need to invest in CG bonds before i file my IT return filing for that 2016-17 ? Thanks in advance

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Ram

You will get 6 months but to claim refund of TDS return you should invest before 31st July, 2017 (Tentative last date of filing of ITR)

Atul Kumar
Atul Kumar
7 years ago

Hello Nitin Ji,

As we know that the interest rates for CG bonds dropped to 5.25%. Do you think that it will go down further? Can they change the interest rate anytime or is there any specific wait time before they can change it again?

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Atul Kumar

In my opinion, the interest rates will drop further over next 6-12 months.

Dr DAVE
Dr DAVE
7 years ago

Hello sir,

Have a nice day. I have a query regarding capital gain. We had sold a plot with a capital gain of 22 lakhs on 1st APRIL 2016 and planning to build a house on my residential plot purchased in 2013. I was wondering can I use this capital gain amount for construction in a plot purchased 3yrs back. As of now I havent open any account for the same and also doudting will it be beneficial to py the tax instead as I read that the interest rate might go further down below 5.25%.
Pls advice
Thansk in advance.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Dr DAVE

You cannot claim capital gain exemption. You may explore option to invest in capital gains bond rather paying capital gain tax.

Rajiv Kalra
Rajiv Kalra
7 years ago

After 3 years can you take the money out without paying nay tax for NRI’s . The only tax payable is on the interest

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Rajiv Kalra

My apologies but your query is not clear to me.

S.Raghuram
S.Raghuram
7 years ago

Can we invest in the bonds for advance money received on transfer of capital asset. i.e. Transfer will take place in the next FY and advance is received in this FY. In that case, investment within 6 months of date of transfer – how can this be fulfilled.

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  S.Raghuram

Title is still not transferred therefore, in my opinion you cannot invest in capital gain bonds.

confused Indian
confused Indian
7 years ago

Dear Sir,

Like the silent majority I am confused about LTCG. I was gifted a property by an uncle in 2000. He had originally purchased it in 1980 for 4L. I am selling it for 2c now. I am purchasing a flat for 1.25C. What do I do with the remainder. Can I invest 50L in CG Bonds? Or is that not applicable as I am purchasing a primary residential property? How much Tax would I owe? What can I do? Please advise.

Nitin Bhatia
Nitin Bhatia
7 years ago

You can invest in capital gains bonds. For calculation of capital gain you can take help of your CA.

Bajaj
Bajaj
7 years ago

I have sold my house for RS two crore sixty lack and CA HAS CALCULATED CAPITALGAIN AMONT AS ONE CRORE FIFTY LACK .I HAVE BOUGHT AFLAT VALUING RS ONE CRORE THIRTY LACK .CAN I BUY BOND FOR RS TWENTY LACK TO SAVE CAPITAL GAIN TAX THANKS

Nitin Bhatia
Nitin Bhatia
7 years ago
Reply to  Bajaj

Yes you can buy capital gain bonds for Rs 30 lakh to save capital gain tax.

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