Section 54 - Long-term capital gains on sale of residential house invested in purchase/ construction of another residential house (subject to certain conditions and limits).
[CAPITAL GAIN TO BE INVESTED IN PURCHASE OR CONSTRUCTION ]
[ SALE TO INDIVIDUAL OR HUF ONLY ]
Section 54EC - Capital gains on transfer of long-term capital assets invested in specified assets (bonds) in six months. [ CAPITAL GAIN TO BE INVESTED IN BONDS OF NHAI & REC ]
From 1.4.2006, investment can be made only in notified bonds of NHAI and REC.
Section 54F - Capital gains on transfer of long-term capital asset other than residential house, invested in residential house, subject to certain conditions. [ net consideration to be invested in purchase of house – 2 yrs. After // Construct in 3 yrs.] [even purchase before 1 yr. ]
( Invest net consideration in Capital Gains Account Scheme To Save Tax before due date of ITR. )
New house should be purchased within 1 year or constructed within 3 years.
You can open a Capital Gains Account Scheme in banks where it is available.
Deposit your capital gains in this account. You have to utilize this amount within 2 years for purchasing a house or within 3 years for constructing a house from the date of sale.
If this deposit is utilized for the specified purpose within the specified period then no advance tax is required to be paid on the gains.
The deposit in the CGAS has to be made by the investor before the last date of filing his ITR for the relevant year.
In case you do not wish to invest the gains in property, then the first day of paying advance tax is 15th of September.
How To Use Capital Gains Account Scheme To Save Tax?
What Is Capital Gains Account Scheme?
If you get long term capital gains , Income Tax Act provides certain exemptions under section 54,54B,54D,54F and 54G .In short these exemption are for capital gains earned on account of
• Sale of a residential house (Sec 54)
• Sale of agricultural land (Sec. 54B)
• Compulsory acquisition of land & building (Sec. 54D)
• Sale of any long term capital asset (Sec. 54F)
• Transfer of assets in case of shifting of industrial undertaking. (Sec 54G)
In all these cases, an assessee is given exemption if the sale proceeds are utilised for some specific purpose. But it happens that the money can not be utilised within short span of time. In that case, there is provision that the money is deposited in designated bank in a special kind of account called Capital Gains Account Scheme (BEFOR THE DUE DATE OF ITR OF RELAVANT PREVIOUS YEAR) and utilise the money for that specific purpose within extend period given in those section.
(Proof of deposit be attached with ITR.)
Therefore , all those assessees who are eligible for exemption u/s 54, 54B, 54D, 54F & 54G are eligible for applying for accounts under Capital Gains Account Scheme.
What are types of deposits under CGAS ?
There are two types of accounts:
Deposit Account-A - This is a saving account.
Deposit Account-B- This is a term deposit account.
Where can I open this account?
You can open this account in any State Bank of India or any bank which is authorised for this scheme. You will have to fill up and submit the Form A in the bank and deposit the money in the account.
What will be the date of deposit in case of deposit of money by cheque?
In case the money is deposited by cheque or draft , the money is realised by the bank even after the date , the effective date for the purpose of counting period given in the provision for exemption will be the date on which the cheque was given to bank.
Can I withdraw money from these accounts ?
Yes, from savings account , you can withdraw by filing Form C with the Bank. However, in case of withdrawal other than initial withdrawal, you will have to submit Form D to the Bank in duplicates.
In case , you want to withdraw from Account Type-B , it will first have to be converted into Type A by filing Form B and then all the methods of withdrawal of money from account A shall follow.
What is the rule regarding the utilisation of the amount of withdrawal?
The amount withdrew has to be spent only for the purpose for which it was deposited as per respective provision under which capital gains arisen. There is also time limit of sixty days from the date of drawl within which it has to be spent. The balance if any , has to be deposited in the bank.
How can I close this account?
Closure By depositor : The depositor will get the approval from his assessing officer in Form G and submit it to the bank.
Closure by nominee: Seek the approval of the assessing officer in Form H who has jurisdiction over deceased depositor and submit to bank.
Closure by legal heir: Seek the approval of the assessing officer in Form H who has jurisdiction over deceased depositor and submit to bank and also submit the disclaimer by other heirs .
Remember however, if there is more than one heir , the assessing officer will give approval only after getting the a succession certificate or a probate of a will or a letter of administration to the estate of the deceased.