Income Tax: Why you should invest LTCG in specified bonds within six months of asset sale

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Updated: December 20, 2017 2:10:59 AM

Capital assets includes jewellery and sale of jewellery will be subject to tax under the head “Income from capital gains”. The gain on jewellery sales are taxed as long term or short term capital gains depending on the holding period.

Invest LTCG in specified bonds within six months of asset sale

• I sold my home in June 2017. Capital gains is Rs 62 lakh. What will be the last date to invest in new property or LTCG savings bonds or capital gains account scheme or can I invest partly?

– S Srinivasan

If you want to invest the capital gains earned on the sale of this house in another residential house, you need to buy the new house within the next two years or construct a new house within next three years. Till the time amount is invested, you need to deposit it in Capital Gains Account Scheme with a scheduled bank before the due date of filing your next income tax return. Hence, if you have sold the house on June 15, 2017, you can buy the new house by June 14, 2019 or construct a new house by June 14, 2020. You will need to deposit the amount of capital gains in Capital Gain Account Scheme by July 31, 2018. If you want to invest the capital gain amount in specified bonds (like bonds of National Highways Authority of India and Rural Electrification Corporation of India), you need to invest within six months from the date of sale of the house. In that case, you need to have invested in these bonds by December 14, 2017. In both the cases, if you invest partial amount of capital gains, then you will get exemption only for the amount invested and balance shall be taxed as capital gains.

• Do I have to pay any tax after selling old gold jewellery?
—Ruby Doshi

Capital assets includes jewellery and sale of jewellery will be subject to tax under the head “Income from capital gains”. The gain on jewellery sales are taxed as long term or short term capital gains depending on the holding period. Further, capital asset does not include any personal effects, however, jewellery is specifically excluded from the definition of personal effect.

• I want to insure my money deposited in savings account. What is the maximum amount that can be insured and are there any tax benefits for it?
—Ashok Kumar

At present there is no insurance cover for money deposited in savings account or fixed deposits apart from the Rs 1 lakh for both principal and interest amount which is insured by Deposit Insurance and Credit Guarantee Corporation. There is no tax benefit for the insurance cover for bank deposits, unlike life or health insurance cover.

The writer is partner, Nangia & Co LLP.
Send your queries to fepersonalfinance@expressindia.com

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