Income Tax FAQs

1. 1. New asset purchased must be a residential house.
   2. New residential house must be purchased within one year before or two years after the date of sale or new residential house should be constructed within three years from the date of sale.
   3. Deposit the unutilized capital gain in capital gains account scheme before filing the income tax return within the due date.
   4. In case of capital gains is up to Rs 2 crore, you can invest the capital gains in two residential houses. However, this option can be exercised only once in the lifetime of the taxpayer.

1. 1. Investment in residential house
   2. Investment in agricultural land upon sale of an agricultural land
   3. Investment in section 54EC bonds
   4. Investment in industrial land upon sale of industrial land

You can claim exemption on capital gains arising upon sale of shares by investing in residential house or in section 54EC bonds. The gains on the sale of shares should be long term capital gains. The conditions prescribed for investment in residential house and section 54EC bonds are applicable for claiming the capital gains exemption.

You can claim capital gains exemption on sale of agricultural land by investing in another agricultural land. The conditions are:

1. 1. The land sold was previously used for agricultural purpose for a period of two years prior to its date of sale.
   2. The capital gain is invested in new agricultural land within two years from the date.

For the purpose of claiming a capital gains exemption, you need to calculate the amount of capital gain and the amount of capital gains exemption. You are required to file an income tax return to claim the capital gains exemption. In case your only income for the financial year is the capital gain, and such capital gain is less than the basic exemption limit of Rs 2.5 lakh, you need not file an income tax return. You can claim a full capital gains exemption by investing the entire sale consideration or the capital gain (as discussed in paragraphs above).

You are required to invest the capital gain or sale consideration within the tax filing due date. Otherwise, you need to deposit the unutilized capital gain or sale consideration in a capital gains account scheme within such due date. Do note that the deposit should be before filing your income tax return.

Under the capital gains account scheme, you can make a deposit in a capital gain account with a PSU bank. Under CGAS, there are two types of accounts, a savings account in Account A and a fixed deposit account in Account B.

You can make withdrawals from the CGAS account for the purpose of purchase of a house or construction of a house.

You can close Account B on maturity. The proceeds are transferred to Account A, from where you can withdraw the funds.

The amount deposited in the CGAS should be used within two years after the date of sale or new residential house should be constructed within three years from the date of sale. In the absence of withdrawal of funds for purchase or construction, the unutilized amount will be taxable as capital gains at the end of three years from the date of sale.