Calculation of Capital Gain Tax is a tedious process and to save it requires lot of information .

Therefore, it is better to meet a Tax professional with all the papers to get a proper idea on your issue. 

For claiming exemption under LTCG, you can claim both exemptions under Section 54EC for land or building and under Section 54F if it's not a residential house. To qualify, you must meet the conditions specified in each section.

If any other house is purchased within one year from the sale of the capital asset or the construction of another house is completed within three years, the exemption will be withdrawn.

Section 54F exemption limit is subject to the amount of sale consideration that is reinvested for the purchase or construction of a new residential property. If the entire sum is reinvested, the full amount is exempt. Similarly, if a portion of the sale proceeds is reinvested, the exemption under section 54F is allowed proportionately.

You are at liberty to buy wife flat if you so desire to save on capital gains 

Yes you can do that

Under Section 27 (i), an individual who transfers otherwise than for adequate consideration any house property to his or her spouse shall be deemed to be the owner of the house property so transferred. As transfer is for 22L, it is deemed genuine transfer, you can claim exemption under CGT.

Yes, you can buy your wife's flat, but it will not help you save on capital gains tax under Section 54 or 54F, because:

1. Purchase from a Relative: The Income Tax Act may disallow exemption under Section 54F if the new property is purchased from a specified relative (which includes a spouse). There’s a risk of the tax department challenging the transaction as a way to avoid tax rather than a genuine purchase.

2. Market Value Consideration: Since you're buying the flat for ₹20 lakh while your wife purchased it for ₹15 lakh, there may be capital gains tax liability for her. The difference (₹5 lakh) will be her capital gain, on which she may need to pay tax unless fully reinvested in NHAI bonds.

3. Monetary Costs: Other than stamp duty and registration fees, you might have to bear:

   • Processing fees for home loan closure (if applicable).
   • Potential income tax scrutiny if the valuation is questioned under Section 56(2)(x), which deems transactions between relatives below market value as taxable gifts. Ensure the sale is at or above ready reckoner rates to avoid issues.

Alternative to Save Tax:

To fully claim exemption, buy a new property from an unrelated seller or construct a new house. This will ensure your capital gains exemption remains valid.

For detailed, personalized advice, consider a phone consultancy. Hope you find the information helpful. You are free to contact me for further discussion. If you could spare two minutes of your time to write a review, it would be greatly appreciated and bring immense happiness to read it. Thank you. Shubham Goyal.

Dear Client, 

You could take relief from long-term capital gains tax by investing the sale proceeds of your flat of not more than Rs 50 lakhs in bonds notified under provisions like Section 54EC, subject to meeting the conditions for availing this benefit within the specified timeframe. The fair market value of Rs 20 lakhs is paid to purchase the flat from your wife, and thus the transaction is a separable one so capital gains on her side could also be mitigated if she proposes to invest her sale proceeds into some eligible bonds. The sale-purchase would, however, attract stamp duty and registration charges, and in addition, there could be legal fees, processing charges for the bond application, or broker fees. The maximum tax benefit would depend on the observance of the conditions laid down in the Income Tax Act, as to the timeliness, after-sale proceeds reaching bonds, and documentation. Getting a tax adviser to set up both transactions properly is beneficial so that the maximum tax exemptions can be availed. 

Hope this helps. Feel free to inquire for any legal queries.