People should pay income tax depending on their revenue. However, one need not pay the capital gains if one is fully aware of the Section 54 F of the Income-Tax Act. A person should have to pay tax on the appreciation of investments done in stocks, bonds and gold or land. For example, a person invested Rs 10 lakh in stocks 10 years ago. The investment grew to become Rs 1.10 crore. The capital gain is put at Rs 1 crore. The IT department allows an exemption of Rs 1 lakh in the amount. The person should pay tax on the rest of Rs 99 lakh. He should have to pay Rs 9.9 lakh towards tax. If the individual buys house with the amount or built a house, he need not pay tax. The person should have purchased or built a house one year prior to the sale of the stocks or within two years of the sale to rule out paying capital gains tax.
