Utilization of CGAS amount for construction of house.

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Q & A Forum › Category: Real Estate › Utilization of CGAS amount for construction of house.
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vijaykumar asked 4 years ago
I have CG of 35 L  from the sale of flat for 60L in 2020  which was of purchased for 8L during 2001. Will these assumptions by me are Legal
  1. I know that I have to open CGAS before June 2021.
2. I have spent 2.5 Lakhs for building plan approval. I need to pay about 7.5 Lakhs for purchase of construction materials.   I think I has to keep only 35 - 10 = 25 L by the end of June 2020 in CGAS , Account-A. 3,  I have to include the details of CG and the opening of CGAS  in the ITR filing during June2021 4. After June 2021  I can with draw from CGAS  multiple times and pay directly to the supplier of raw materials and keep  bills/receipts for verification by AO.  I any amount un-utilized amount has to be deposited back to  CG account. 5,  Do I need to mention the status of house construction in next ITR of June 2022, June23,  until the construction completion. Please Go through each point and  correct if any thing is not  in order. Thanks in Advance VIJAYAKUMAR
2 Answers
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Sreekanth Staff answered 4 years ago
Dear VIJAYAKUMAR, Your understanding is correct. Note that the interest amount payable on CGAS scheme is a taxable income and needs to be shown as 'income from other sources' in ITR.
  • The deposited money can be used only to buy or construct a residential house within the prescribed time frame.
  • If you withdraw funds from this account, they have to be used within 60 days.
  • If you do not utilize the amount within three years of the sale of the first property, such un-utilized amount will be treated as LTCG this will lead to taxation of the unutilized amount as long-term capital gain after three years of the sale of the first / original property.
  • The interest rates paid on these accounts are the same as those on regular savings and term deposits. Kindly note that interest earned on this account is taxable.
Suggest you to also consult a CA in this regard.      
vijaykumar replied 4 years ago

Thanks for the prompt reply.
please bear with me. I wanted brief answer to point 4 and 5 stated above
Thanks

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Sreekanth Staff answered 4 years ago
Dear VIJAYAKUMAR, 4 - Any amount withdrawn is required to be utilised for specified investment within 60 days of withdrawal and any unutilised amount may be re-deposited in the account immediately. 5 - I believe that its not required   
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