Income Tax: Investment in 54EC capital gains bonds can’t be redeemed before 5 years

By: | Updated: November 21, 2018 3:42 AM

If you are not able to sell the old property after one year from the date of purchase of new property, you cannot claim capital gain tax exemption for the property purchased earlier.

income tax, income tax deposit, income tax filed, income tax assessment, income tax return, income tax filed, GST, goods and service tax, unified tax, tax returns, tax payment, economyYou can withdraw 75% of PF balance within one month of quitting a job and remaining 25% in case of unemployment for two months.

Q1. Is the time limit on purchase of property one year before sale of another property extendable to gain capital tax exemption under Section 54? I bought a property in December 2017 to claim tax exemption on capital gain from another flat which is under sale. I am unable to get a fair price and afraid that I will not be able to finish the sale before December 2018. What are my options? – Swaminathan

If you are not able to sell the old property after one year from the date of purchase of new property, you cannot claim capital gain tax exemption for the property purchased earlier.

Also, if a taxpayer is unable to invest the amount of capital gain in year of transfer, he can deposit such amount in Capital Gain Account scheme before due date of filing of ITR. However, if the amount deposited is not invested in another property purchased within the prescribed time, it will be chargeable to tax.

Further, as per Section 54EC, you can invest capital gain up to Rs 50 lakh in long term specified bonds, like that of NHAI and REC, within six months from date of transfer. Such bonds cannot be redeemed before five years from date of transfer.

Q2. I worked in India for two years and my employer had deducted provident fund every month and deposited to EPFO. The third year I was on an overseas assignment and my PF account was frozen and no contribution made thereafter. If I go back to India and am unemployed, can I withdraw the full PF amount and is it taxable? —V.Manoharan

You can withdraw 75% of PF balance within one month of quitting a job and remaining 25% in case of unemployment for two months. Further, the amount withdrawn is taxable in case of withdrawal before completion of five years of continuous years of service. As per our understanding, you fulfill all the above mentioned conditions for withdrawal of EPF . However, this amount will be taxable.

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Q3. I had filed ITR4 before July 31, but have not got final order. By when can I expect the final assessment to come? —Gautam Kumar

The time limit to receive intimation under section 143(1) of Income-tax Act, 1961, is within one year from the end of the financial year in which the return is made. If you filed your return on July 31, 2018, you can expect to receive final assessment by March 31, 2020.

The writer is partner, Ashok Maheshwary & Associates LLP. Send your queries to fepersonalfinance@expressindia.com

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