The income tax department has extended the deadline for a variety of compliances linked to the long-term capital gains tax exemption till March 31, 2023, which will be helpful to many taxpayers.
In order to claim any exemption under the terms of Section 54 to 54GB of the Income-tax Act, 1961, the Central Board of Direct Taxes (CBDT) had, in June 2021, given a relaxation for certain compliances to be made by taxpayers, such as investment, deposit, payment, acquisition, purchase, and construction.
The circular said that persons who had to invest in bonds or another property between April 1, 2021, and September 29, 2021, in order to save long-term capital gains from certain transactions might do so by September 30, 2021.
This deadline will now be extended by the Central Board of Direct Taxes (CBDT) until 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”. This is the second such extension made available under the CBDT’s provision.
According to experts, this will provide taxpayers more time to make choices and investments to take advantage and reduce capital gains tax.
The relief will provide taxpayers with the chance to assess their capital gains investment in possibilities that are now open to them but weren’t or could only be pursued with certain restrictions a year ago owing to the pandemic.
Section 54 of the Income Tax Act addresses capital gains tax and the ability to obtain an exemption from the sale of a residential property by either buying another residential property or acquiring certain bonds and other financial instruments.
Both individuals and HUFs are eligible for the exemption. The residential property must be bought either a year before or within two years of the sale of the preceding property. For new property development, there is a three-year opportunity to take advantage of the exemption.
