Capital gain is the difference between the higher selling price and the lower buying. cost. Generally when people sell real estate after a few years they get a higher selling price than the original cost. The difference is the gain or income or profit from that capital transaction. So it is called Capital Gain.
When you say you are going to sell for twenty lakhs and considering there is no capital gains,then it means that your original purchase price was 20 lakhs or below.
The IT department gets information of high value transactions from the registrar office and they keep a tab of these. They can correlate the transaction with the returns submitted in relation to the PAN, as the details are also available in the registration records and the deed.. However it can also happen that in the maze of thousands of returns a relatively lesser amount transaction can get ignored also.
Please find out if there is a 'fair Market value' (FMV) record for the properties in your area for each year or period. The stamp value will be calculated based on the FMV. Undervaluation will not be permitted. Even if you are selling the property below the FMV, as per the recent amendments,for capital gains FMV or selling price whichever is higher is taken.
So before concluding the deal please verify if such a FMV is in vogue in your area form theSRO and you should comply with that.
In case you have complied with the FMV and still there is no capital gains, then you need not worry.
You have to show the transaction in the particular schedule/column in the IT return which asks for the indexed cost and sales cost. As there is no capital gains you need not pay any capital gains tax. You can use the money as you wish. If you keep in FD only the interest earned on it will be taxable.
However if the selling price is higher, then you can take the Inflation Indexed value for the transaction. Now the base is 2001. You can get the Inflation Index for the year of purchase and the index on the year of selling. From that you can find what would be the indexed value for the original cost ,as on date of selling. That will be the indexed cost. Now, the difference between the sales price and indexed cost value is the amount to be reckoned for capital gains tax.
To avoid capital gains tax, you have to invest the whole amount of capital gains in the capital gains bonds within six months of the sale transaction.