As per section 139, if the gross total income crosses the minimum exemption limit, it is compulsory to file ITR. The minimum exemption differs for each age group. When land purchases end in loss, there is no other profit and no refund is obtained, instead, ITR is not needed to be released.
There is a group that does not have to file their taxes even if during the year they have earned any sort of money. These are people with gross total income (GTI) below the exemption limit. The basic tax exemption limit for a person depends on his / her age and residential status under the current tax scheme. Resident taxpayers are classified into three groups according to their age:
1. Residents aged less than 60 years old
2. Senior citizens older than 60 years but less than 80 years
3. Senior citizens older than 80 years
In long-term capital gains estimation, indexed acquisition costs, indexed improvement costs, and transfer-related expenditures (such as trading, commission, ads, expenditures, etc.) are subtracted from revenue valuation.
This profit is paid at applicable rates (currently 20 percent). Anyone within one year before or two years after the date of selling of the estate, spend the capital gains to purchase, or within three years after that date, create one house in India to minimize the tax burden (Section 54F).
In different cases, it has been maintained that the construction of the new house may be begun just before the old house was transferred. Construction does not need to continue immediately after such transfer. To be considered for exemption, only the construction must be finished within a stipulated time from the transfer date.
There have also been adverse decisions in this regard where Section 54F was refused exemption as the land was constructed well before the date of asset transfer.
As both methods have been ruled, conservatively, the financial benefits from the plot cannot be changed for the investment in under-construction property as the investment was made 1.5 years before the date of sale, while the statute prescribes the transaction time limit as ‘one year before’ or ‘two years after the date of sale only in the case of an acquisition.