Rural areas in India do not consider Agricultural land as capital assets therefore no capital gains are applicable on its sale. No one can be taxed even if he/she uses the entire amount he gets by selling this property to buy a house property.
One must satisfy the following conditions in order to avail concessions under section 54F
One will not be required to pay any tax if he/she satisfies the above mentioned conditions and invests the entire sale proceeds towards the purchase of the new house. No tax will be levied on the capital gain if one invests in the Capital Gains Account Scheme in India for the specified period suggested by the bank then he is exempted from paying tax on Capital Gains. If he/she fails to keep the money in the scheme for the completely specified period then the money will be treated as capital gain.
In case of a long-term Capital asset the tax in India will be exempted under Section 54EC. If one does not intend to invest in another property then he/she may invest in certain bonds for a specified reason as such can be redeemed in 2 years. The government gives 6 months to invest in these bonds.
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