Budget 2025 Expectations : Clarify Deposit in Capital Gains Deposit Account

Budget 2025 Expectations : Clarify Deposit in Capital Gains Deposit Account

Capital Gains, Section 50C, and the Capital Gains Deposit Account:

• Capital Gains: When you sell a property, the profit (sale price minus cost) is a capital gain and is taxable.
• Exemptions: Sections 54, 54F, etc., offer exemptions if you reinvest the gains in specific ways within a timeframe (usually 3 years).
• Capital Gains Deposit Account: If you haven’t reinvested by the tax filing deadline, you can deposit the uninvested amount into this special account to still claim the exemption.
• Section 50C: If the property’s sale price is lower than the stamp duty value, Section 50C deems the stamp duty value as the sale price for calculating capital gains tax.
• Ambiguity: Whether the deposit in the Capital Gains Deposit Account should be based on the actual sale price or the higher stamp duty value (as per Section 50C) is unclear in the current law.
• Judicial Rulings: Delhi and Kolkata Tribunals have clarified that the deposit should be based on the actual sale price, not the deemed value under Section 50C.
• Budget 2025 Recommendation: The government should amend the law to explicitly state that the deposit should be based on the actual sale consideration, removing the ambiguity and preventing undue financial burden on taxpayers.