I am a pensioner and am filing ITR 1 regularly. In the financial year 2020-21, I have sold a residential plot which was bought in 2002. I bought a residential flat by investing the money received on the sale of the plot and adding some more money from my savings. I understand that I do not have any tax liability for profit on sale of plot of land on account of reinvestment in residential house. Is my understanding of the law correct or are there other conditions to be satisfied in order to claim this exemption? Also tell how to disclose it in ITR and which ITR should be filed?
However, capital gain on sale of plot of land is not taxable, as exemption is available in Section 54F, you can’t file your ITR 1 Exemption as income exceeds the limit of five thousand rupees. So you have to file ITR 2.
Before you consider capital gain on sale of plot of land as exemption under section 54F, I would like to state that before you can claim exemption under section 54F, you need to fulfill certain conditions.
It looks like you have invested in a residential house in the same year, so one condition is fulfilled. However, you can claim exemption under section 54F on sale of any property other than a residential house if and only if you have more than one house (other than the house you are buying) on the date of sale of the plot Not there. Of the land Therefore, if you had more than one house on the date of sale of this plot, you are not entitled to claim exemption under section 54F. Even if you jointly own a residential house with others, it should be treated as ownership of a house for the purpose of section 54F.
Balwant Jain is a tax and investment specialist and can be contacted on Twitter at jainbalwant@gmail.com and @jainbalwant.
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