House sale: What is the deadline to invest in capital gains bonds to save tax?

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Question: If I sell my house in July 2021, when the tax is to be paid? If I want to invest in the capital gains bonds to save tax, then by what time I have to invest the money? Please let me know whether I have to invest the indexed gains or actual gains in the bonds? – Akhilesh

Answer: A person has to pay advance tax if his net tax liability after deducting the tax deducted and collected against the total tax liability exceeds ten thousand rupees. So in case if your net tax liability exceeds ten thousand on your total income you have to pay the advance tax as per the due dates of advance tax i.e. 15th June, 15th Sep, 15th December and 15th March in the ratio of 15%, 30%, 30% and 25%. In respect of tax liability for capital gains, the advance tax has to be paid in the balance instalment after date of sale of the asset. Since your transaction of sale will happen in July 2021, you will have to pay the advance tax on the remaining due dates but you will have to pay 45% of the advance tax by 15th September, 2021.

In case you wish to invest in capital gains bonds of specified financial institutions to avail the exemption under Section 54E, you have to make the investment in these bonds within six months from the date of sale of the property irrespective of the date of receipt of the consideration. It is the capital gains computed after taking into account cost inflation index of year of purchase and sale on which you have to pay the advance tax. Likewise you have to pay the taxes on indexed gains only.

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Balwant Jain is a tax and investment expert and can be reached on [email protected]

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