Capital gains’ tax liability on selling a house

Exemption can also be claimed by making investments in bonds issued by the National Highways Authorities of India or the Rural Electrification Corporation under Section 54EC of the IT Act. To remain eligible for the exemption, such specified assets should not be converted into money within a period of three years from the date of acquisition.

Depositing the money in Capital Gains Account Scheme

Although capital gains are required to be invested as mentioned above, sometimes a suitable property may not be available. In this event, the capital gains can be deposited in the Capital Gains Account Scheme (CGAS) before the due date for filing the tax returns, to stay eligible for the exemption.

The deposits with CGAS must be utilised within the specified period, i.e., two years if a property is purchased or three years in the event of construction of property. If the amount is not fully utilised, it shall become chargeable to tax.