I am 83, my wife 75 and our only bachelor son 46. We have a 30’ x 40’ site in my wife’s name on the outskirts of Bengaluru, beyond city corporation, which is under panchayat administration, purchased and registered on September 8, 2004 for ₹42,000. We intend to sell the same now for ₹16 lakh. We also have a flat with built-up area of about 1,100 sq. ft. on the outskirts of Bengaluru, beyond city corporation limits, under Panchayat administration (now also under panchayat) purchased and registered in the names of all the three of us on January 30, 2021 for ₹67.79 lakh. The flat has been kept locked and never let out at any time. We intend to sell it for ₹86.5 lakh. We do not have any idea to invest in any property at least for the next 2/3 years. All of us have PAN cards andbeen paying I-T for the past many years. We wish to know the following:

(a) To avoid or to reduce to the minimum, the payment of Capital Gains Tax, how much money do we have to deposit in a Capital Gains Account?

(b) What are the options available to us for investments/deposits, the sale proceeds and the annual interest rate and minimum period for the deposit?

(c) Can I and my wife deposit a part of this money in the Senior Citizens’ Saving Scheme in the Post Office, which offers 8.2 per cent annual interest?

(d) Since the flat is registered in the names of all the three of us, should we get the sale proceeds in three different cheques/ DDs for equal amounts? If so, what are the benefits? Kindly, also give us any other relevant advice?


A Point-wise response:

a) It is to be noted the purpose of Capital Gains Deposit Scheme is for the temporary parking of the funds arising from the sale of the long-term capital asset and use the same to purchase or construct house properties within the timelines prescribed in Sections 54 & 54F.

Depositing the long-term capital gains in such accounts shall not grant any exemption if it is not further invested in house properties.

However, you may, under Section 54EC, claim an exemption of long-term capital gains when an amount of up to ₹50 lakh is invested in Capital Gains Bonds within six months of the date of the original transfer.

b) As mentioned above, an investment of up to ₹50 lakh in capital gains bonds can be done to claim exemption of long-term capital gains. Such bonds are issued by NHAI, REC, PFC and IRFC with a lock-in of 5 years. You may look into details such as the prevailing rate of interest and other terms of the bond issue in their official websites.

c) Deposit in senior citizen savings scheme does not qualify for claiming exemption of long-term capital gains.

d) Since the property is in the name of three people, it has to be taken equally or in the same proportion of ownership as per the purchase document. However, if there is a joint bank account for all three sellers then a single payment can be taken to the specified account as a matter of convenience. Moreover, benefit under Section 54EC can be claimed by all of you or individually by any one of you.

Q For a.y. 2024-2025 10E tax relief can’t be deducted under new tax regime? So, should 10E be calculated as per old tax regime?


A Form 10E is to be filed for claiming relief under Section 89 read with rule 21A. The aforementioned relief is not specifically excluded from the list of deductions and exemptions as provided in Section 115BAC (alternative tax regime, in other words, new tax regime).

Relief under Section 89 has to be calculated based on Rule 21A. There are certain calculations involved to arrive at the relief. If new tax regime is opted for the current assessment year, relief under Section 89 may not be available since the rate of taxation under the new regime would be less compared with the earlier years. Therefore, after calculating the relief under new and the old regimes, you may choose to opt for the correct regime based on calculations.

(The writer is partner, GSS and Associates, Chartered Accountants, Chennai)