LTCG query: You don’t need to construct house within three years for tax benefit

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New Delhi | March 05, 2018 2:33 AM

The LTCG claim will not be reversed for fault of a builder as there are various rulings in favour of taxpayers where it has been held that for exemption under Section 54, comple-tion of construction within three years is not mandatory.

LTCG query, tax benefit, economy, indiaPension income received by the relatives of deceased who are the beneficiaries shall be treated as the income of an Association of Persons (AOP) rather than being taxed individually. (Reuters)

Section 54 in 2013 for purchase of new house. This new house is still not ready due to financial stress faced by the builder. Will my claim of LTCG get reversed?

– Fanendra Munot

The LTCG claim will not be reversed for fault of a builder as there are various rulings in favour of taxpayers where it has been held that for exemption under Section 54, comple-tion of construction within three years is not mandatory. Only construction must start within three years. Thus, exemption claimed in 2013 need not be reversed.

If I sell two commercial properties in the same financial year, can I reinvest the total sale proceeds in one residential house property to save LTCG under Section 54 F?—Rishi
Exemption under Section 54F is available if investment is made in one residential house from the proceeds of sale of any long-term capital asset (not being a residential house), when the purchase is made within two years before the date of sale or within two years after the date of sale or construct-ion is done within three years from the date of sale. Thus, if you reinv-est the sale proceeds from two properties in one residential house within two years from the date of sale or within three years from the date of sale ( in case of construction), then, you can save LTCG under Section 54.

l I receive Rs 1 lakh as family pension after the death of my wife. The amount is used for the entire family including myself, my sons and their children. I am filing my returns as an individual as well as karta of HUF in my name. I have not shown this amount in my returns. What should I do?

—Rajesh Bajaj

Pension income received by the relatives of deceased who are the beneficiaries shall be treated as the income of an Association of Persons (AOP) rather than being taxed individually. However, if any part of the income is earmarked for any specific beneficiary, that particular part is taxed in the income of that particular person u/s 168(4).

Before going to the US, I had started a PPF account. How is the interest calculated?

—Gowthan Chand

Interest on PPF account is calculated monthly on the minimum balance during a month but credited on an yearly basis. The Central government revises the interest rates from time to time. The current interest rate with effect from January 1, 2018 is 7.6%.

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