I sold my apartment on November 30, 2021 by registering a sales agreement. I received the balance of the sale proceeds after 3 months because the buyer had a bank loan and the disbursement is made after 3 months. How long do I have to pay capital gains tax? Should I have paid in the same fiscal year, i.e. 2021-22 or within six months of registration of the sale agreement or completion of the full transaction? Also, until I pay no capital gains tax, can the amount be kept in my savings account? – Shah Jagadish
Any transfer of capital property during a fiscal year is taxable in the hands of the taxpayer only in the fiscal year in which such transfer took place. In addition, where a taxpayer intends to avail himself of the exemption provided for in Section 54 of the Income Tax Act for the purchase of another residential property, he may invest the amount capital gain within 2 years of the sale of the old property. If the taxpayer is unable to invest the capital gain until the time of filing the tax return, the amount must be deposited in the Capital Gain Account Scheme.
Thus, in your case since the agreement is registered in November, the capital gain realized in this case would be taxable in the 2021-22 financial year and you had to pay withholding tax on it in the December installment due on December 15, 2021 and in the March installment which was due on March 15, 2022. The entire transaction must be reported in the tax return, which is due by July 31, 2022, unless extended.
Please note that the same deadline, i.e. July 31, 2022, would apply to the transfer of the amount from your savings account to the capital gains account.
This question is answered by Amit Maheshwari, Tax Partner, AKM Global, a tax and advisory firm. Send your personal finance questions to firstname.lastname@example.org for expert answers.