Capital Gain Account Scheme (Finance Bill July 2024)

I sold in August 2021 unlisted equity shares purchased in 2006 and moved the long term capital gains to a capital gain account in July 2022 and claimed deduction u/s 54F of Income Tax Act in ITR AY 2022-23 I could not purchase new or construct a new house and now wish to close the capital gain account in August 2024 i.e.after expiry of three years of transfer of asset as per law. As per section 54F, the unutilized amount in the capital gain account will be treated as LTCG income in the year in which it is closed. Now, when I withdraw the unutilized money from capital gain account, whether I have to pay capital gains tax u/s 112 on the old rate of 20% or the new rate of 12.5% as per new Finance Bill 2024.

Pls review reply in following context marked in bold letters and underlined below - Section 45 states that - "Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place" And Section 54F relevant portion is- Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then__ ______shall be charged under section 45 as income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw the unutilised amount in accordance with the scheme aforesaid. Our query- 1. Section 45 the charging section for capital gains specifically excludes 54F whereby deemed date of transfer is clearly shifted/roll over to date of transfer mentioned in 54F.Section 54F supersedes Section 45 as mentioned "save as otherwise provided in sections...54F.." in Section 45. 2. Also please refer income tax e-filing utility ITR Schedule CG clause 11 "Amount deemed to be long-term capital gains"By considering the date of withdrawal from CGAS as "date of transfer" then utility/department Tax calculator calculates advancetax instalments,interest under 234C at the tax rate,cess and super surcharge applicable to the year of withdrawal and not the rate applicable for the year of original date of transfer. The ITR were filed and assessment orders issued accordingly. 3. In which section it is mentioned that tax rate applicable for the year of the date of transfer of original asset will apply to the date in subsequent year when amount in which CGAS amount is withdrawn and offered to tax.

Section 45 and Section 54F Interplay:
- Section 45 charges capital gains tax in the year of asset transfer but is subject to Section 54F.
- Section 54F defers the capital gain if invested in a new asset, deeming it income if not used within three years.

ITR Utility Calculation:
- The ITR utility treats the date of CGAS withdrawal as the date of transfer for tax calculation.
- This affects the computation of advance tax, interest under section 234C, and applies the tax rate, cess, and surcharge for the year of withdrawal.

Tax Rate Applicability:
- The tax rate for the year of withdrawal from CGAS is applied, not the year of the original asset transfer, as per Section 54F(4).

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Shubham Goyal

Capital Gain Account Scheme (Finance Bill July 2024)

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