Many taxpayers are under the impression that once a financial year comes to an end, all opportunities to reduce their tax liability are permanently lost. Ramesh, a property owner from Hyderabad, shared the same belief. However, instead of hastily paying a huge sum in taxes, he discovered a lesser-known provision that completely eliminated his tax burden. His case illustrates that even after the financial year has ended, smart and timely planning can lead to significant tax savings, a point recently highlighted by tax platform TaxBuddy.
Ramesh had sold his residential property in May 2024 and earned a substantial long-term capital gain of Rs 50 lakh. Naturally, he assumed that he had no choice but to pay over Rs 10 lakh in capital gains tax while filing his income tax return. In fact, TaxBuddy revealed through a LinkedIn post that Ramesh was prepared to pay Rs 10,40,000 in tax, thinking that he had missed his chance to save. However, with proper guidance, his tax liability was brought down to zero.
Ramesh’s return is due on September 15, 2025, but at the time, he had still not finalized a property in which he wanted to reinvest his gains. This is where the Capital Gains Account Scheme (CGAS) turned out to be a game-changer. Instead of rushing into an unsuitable or overpriced property just to save taxes, TaxBuddy advised him to deposit his gains into the CGAS before the due date of filing his return. By doing so, he was able to lock in his exemption while also gaining more time to make a thoughtful investment decision.
The advantage of CGAS is that it provides a taxpayer with flexibility. After depositing the money, Ramesh had up to two years to purchase a new property or up to three years if he chose to construct one. During this period, his exemption remained safe, and he did not have to worry about losing tax benefits. By simply using this option, Ramesh reduced his tax liability from Rs 10.40 lakh to nothing, proving that knowledge of the right provisions can save lakhs of rupees.
TaxBuddy explained that under Section 54 and Section 54F of the Income Tax Act, capital gains can be exempted if they are reinvested in another property. When reinvestment cannot be made immediately, depositing the amount into CGAS before the ITR deadline ensures that the exemption is preserved. This provision exists to prevent taxpayers from making hasty investment choices under pressure.
The broader message for taxpayers is straightforward: September 15, 2025, is not just the deadline to file income tax returns but also the final opportunity to secure an exemption on capital gains if reinvestment has not yet been completed. Failing to act before this date could result in losing out on substantial tax savings.
This case serves as a reminder that with informed planning, taxpayers can avoid unnecessary stress and financial burden. Instead of feeling forced to rush into investments, individuals can use legal provisions like CGAS to buy themselves time and peace of mind. In Ramesh’s case, what seemed like an unavoidable tax bill of over Rs 10 lakh was reduced to zero, all because he took the right steps at the right time.
