The Central Board of Direct Taxes has extended the investment cut-off date to save on capital gains tax to March 31, 2023, a move that will help owners who have recently sold their immovable property. In a notification issued on January 6, 2023, the statuary authority said that for the investments that had to be made between April 1, 2021, and February 28, 2022, the deadline has now been extended to March 31, 2023.
“In view of the representations received and on further consideration of the then prevailing COVID-19 pandemic and resultant restrictions imposed, causing genuine hardship faced by taxpayers in making the aforementioned compliances under the Act, the CBDT provides that the compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54 OB of the Act, for which the last date of such compliance falls between 01 April, 2021, to 28th February, 2022 (both days inclusive), may be completed on or before 31st March 2023,” the CBDT circular said.
For the uninitiated, taxpayers in India can save long-term capital gains tax by using the proceeds to invest in a house or specified bonds.
To ensure benefits for owners who sell their existing property to purchase a new one to live in and not for making money through the same, the income tax law allows tax deductions under Section 54 and Section 54F.
Under Section 54, the investment in the new property must be made within 2 years of the sale of the previous home. In case the new home is bought before the sale of the old house, you can still claim deductions under Section 54, if the purchase was made not more than a year before the sale.
According to tax experts, taxpayers who have claimed capital gains tax exemption in their tax return on the basis of difficulties faced due to the pandemic, they can invest within the extended time period and update this information in their tax returns.
An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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