I sold my flat for Rs 36 lakh. Where can I park this money before buying REC Bonds to save tax?

financialexpress.com:

Welcome to the Reader’s Query segment of FE Money. This week, Dr C T Sridhar from Hyderabad shared with us that he has received Rs 36 lakh on selling his flat recently and he is planning to subscribe to REC Bonds to save on capital gains tax.

Dr. Sridhar asked whether he could park this money temporarily in his Savings Bank account or transfer the money to the SBI Capital Gain account before deploying it to REC bonds. Further, Dr. Sridhar wanted to know whether he should declare this amount to the Income Tax Department before purchasing REC bonds.

Dr. Suresh Surana, Founder of RSM India, a tax consultancy firm, answers Dr Sridhar’s queries:

The Capital Gains Accounts Scheme, 1988 (hereinafter referred to as ‘the Scheme’) allows taxpayers to claim the benefit of tax exemption under the S. 54 series (by way of depositing the amount of capital gains/ sale consideration in the capital gains account for investment in residential property) while furnishing their tax return for the relevant financial year in case where the taxpayer has not been able to make the required investment subject to certain conditions.

However, it is pertinent to note that the said Scheme is not applicable in the case of Section 54EC (which provides tax exemption up to Rs 50 lakh on capital gains derived from immovable property provided such gains are invested in specified bonds including RECL bonds within 6 months from date of sale/ transfer of immovable property).

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As such, the taxpayer can temporarily park his/her proceeds in the SBI savings account as the investment in specified bonds needs to be made within 6 months from the date of transfer of house