Income Tax Department gave relief on long term capital gain, but these people will not get benefit Under this, for the period between 1 April 2021 to 28 February 2022, you can take advantage of this by fulfilling the conditions of investment, deposit, payment, acquisition, purchase, construction etc.
Now taxpayers can do the compliance of purchase or construction till March 31, 2023. However, the due date of December 31, 2022 (FY 2021-22) for filing delayed/revised returns has passed. In such a situation, there is confusion among some taxpayers about taking its benefit.
Why issued this circular
In view of the turmoil caused by the Covid epidemic, the CBDT had given time till 30 September 2021 to those taxpayers who could not fulfill the said condition between 1 April 2021 and 29 September. However, the issue of inadequacy of the extended time limit was raised before the CBDT.
What are the exceptions
Under the Income Tax Act , a taxpayer is eligible to claim exemption from tax on income or gains arising on sale or transfer of long term capital assets such as house, agricultural land, industrial assets or land or building etc. For this, under section 54 to 54GB of Income Tax Act, the amount related to capital gain has to be used. The payment deadline for required compliance ranges from six months to three years.
Circular effect
For example, if a taxpayer claims deduction under section 54 for FY 2018-19 on transfer of his house for construction of another house on February 1, 2019, he can claim deduction for three years i.e. up to January 31, 2022. get time. Now the taxpayer can take advantage of this first circular of 2023, if he utilizes his remaining capital gains by March 31, 2023. Similarly, in case of transfer of an agricultural land on January 5, 2020, exemption can be claimed till January 4, 2022 (i.e. two years). Thus, he is now allowed to fulfill the required condition till March 31, 2023.
In case of non-compliance by the extended deadline, the taxpayer will have to pay capital gains tax in the current financial year 2022-23.
Who will not get the benefit of this circular
If the date of completion of compliance is not expiring between 1 April 2021 to 28 February 2022, then the taxpayer cannot claim the benefit till the extended period.
Taxpayer cannot claim benefit in the extended timeline for the purpose of crediting unutilized amount to Capital Gain Account , even if the due date for completion of compliance falls during the said period. For example, taxpayers were given time till July 31, 2022, to deposit unutilized capital gains on long-term capital assets sold during FY 2021-22, which were not to be audited. In such a situation, the benefit cannot be claimed in the extended date, because the date for filing delayed or revised returns for the financial year 2021-22 has passed on 31 December 2022.
This condition is also applicable in case where exemption under section 54 EC has been missed for long term assets transferred during the financial year 2020-21 or 2021-22 where the amount of investment after the date of transfer The period of six months provided for is falling between 1st April, 2021 to 28th February, 2022, as the return filing date for both the financial years has passed.
It appears that the CBDT has deliberately issued the circular after the due date for filing belated returns or revised returns for FY 2021-22 has passed, so that only certain categories of taxpayers can avail the benefit of claiming the exemption.
