Tax Implications on Capital Gains Account Funds not used within 3 years (Builder delay)
I had capital gains on sale of an apartment in 2013 which was part used to buy an apartment under construction and the balance was deposited in the Capital Gains Deposit Account Scheme.
Due to more than a 7 year delay by the builder, I have not been able to use the amount deposited in the Capital Gains Deposit Accounts Scheme which would have been used to pay for balance price of the above apartment which is delayed.
The bank has frozen the account and there is no interest being accrued to the same.
The advise I need is :
1. What is the procedure to retrieve the funds now blocked in the Capital Gains Deposit Account in the above case. What are the tax liabilities for the principal and interest that may have accrued in the account.
2. If the apartment is now planned to be built by a second builder (who had taken over after NCLT proceedings) and assuming he raises a demand for the next instalment of payment, will I be able to use the Capital Gains account for the same and will there be any tax implications since it is more than 3 years from the date of deposit into the account since the builder has delayed the project by more than 7 years now.
Please advise.
Thank you for your support.
Regards,
Navendu
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Official comment
Hi,
If the amount deposited in the Capital Gains Account Scheme (CGAS) is not utilized within the time limit mentioned, then it will be treated as income of the last year in which 3 years expire. Since you would have claimed the exemption for capital gains by depositing it in the CGAS.
The amount will be taxed as capital gains income. And the interest amount will be taxed under the head Income from Other Sources if not taxed earlier.
You should connect with your bank the retrieve the funds from the capital gains accounts scheme. You can either use Form C for the first withdrawal or Form D for subsequent withdrawals.
Hope this helps :)
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