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Investment options in India to save Capital Gains

What we offer?

On analyzing the scenario of the client, we help to save taxes arising on sale of a Capital Asset by proper tax planning and effective usage of Roll over Deductions:

  • Advise on Tax Deduction
  • Computation of Capital Gain taxes
  • Effective usage of Roll Over Deductions
  • Tax planning methods
  • Filing of Returns

Miss Deepika is a Non-Resident Indian and a Tax Resident in Australia. She recently sold her apartment in Mumbai and incurred a Long Term Capital Gain of Rs 55,00,000/- She is worried about the taxes arising thereon. She seeks our advice regarding Roll-Over deductions in order to reduce taxes.

Here are the options available for Deepika:

If you plan to use the gain to build a house, it has to be done within three years of the sale of the property. When you buy a plot to build a house, the cost of land is included in the construction cost. Even buying an under-construction property entitles you to tax deduction. One can buy an under construction apartment to save capital gains tax, provided its construction is completed within three years of the transfer of the first property. If the new property is sold within three years of purchase or construction, the deduction is reversed and taxed as short-term capital gain.

Invest in bonds (Section 54EC)

These bonds are issued by the Rural Electrification Corporation and the National Highways Authority of India. The exemption is equal to the investment or the capital gain, whichever is lower. If you transfer or take a loan against these bonds within three years, the capital gain will become taxable. You can invest a maximum of Rs 50 lakh during a financial year in these bonds.