I sold a house, inherited from my father, in July 2016 and made long-term capital gains of Rs 12.75 lakh. I deposited this amount in a capital gains account as I wanted to use it to purchase another house. But I haven’t been able to utilise this sum. How much capital gains tax will I have to pay? Will there be a penalty? When do I have to pay the tax?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies, "If a person is unable to invest the capital gains before the due date for filing income tax return of the previous year in which the house has been sold, then the money needs to be deposited in the capital gain account scheme (CGAS) for claiming tax exemption. If this amount is withdrawn from CGAS before three years for reasons other than building/purchasing a house, then the amount will be taxable in the previous year in which it is withdrawn. If the amount is not utilised within three years for purchasing/constructing a house, it will be taxable after the expiry of three years from the date of sale. In your case, if the amount is not utilised within three years, then it will be taxable at 20% in 2019-20, along with 4% cess. No penalty will be levied."

Can an individual whose total professional and other income is less than `50 lakh file ITR 3 and avail of 50% deduction towards expenses?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies, "Ordinarily, an individual with professional income less than Rs 50 lakh and availing 50% deduction towards expenses under Section 44ADA cannot file ITR 3. The person must use ITR 4. But, if the person has income from capital gains or income from more than one house, then she will need to file the tax return through ITR 3."