Article explains Exemptions from paying Long term capital gain (LTCG) from sale of Residential House Property under Section 54 on Residential House Property sold by an individual or a HUF, Under Section 54EC on Any Land or building sold by any person and under Section 54GB on Residential House Property sold by an individual or a HUF.

Section

Asset sold Investment Other Conditions
54 Residential House Property sold by an individual or a HUF ­ Purchase of another residential house property within 1 year before or 2 years after the sale residential house property

­ Construction of another residential house property within a period of 3 years from the date of sale of property

­ Property purchased/ constructed shall not be transferred within a period of 3 years from the date of acquisition

­ In case, amount of LTCG is less than INR 2 crores, exemption against purchase/ construction of maximum of 2 house property can be claimed (this option can be exercised only once)

­ In case, amount of LTCG is more than INR 2 crores, exemption against purchase/ construction of only 1 house property can be claimed

­ If the asset is sold in the previous year, and the seller intends to, but is yet to purchase the new house property as the time limit of 2 years or 3 years has not yet expired, then the assessee is required to deposit the amount of gains in the Capital gains account scheme (in any branch of public sector bank) before the due date for filing income tax returns.

54EC Any Land or building sold by any person ­ Investment in long term specified bonds within a period of 6 months after the date of transfer. ­ Investment shall be made for a minimum period of 5 years.

­ Interest earned from such bonds is not tax free.

­ LTCG shall be exempt upto INR 50 Lakhs.

54GB Residential House Property sold by an individual or a HUF ­ subscription of equity shares of a eligible start-up before the due date of furnishing the return of income. ­ The amount of subscription as share capital is to be utilized by the company for the purchase of new asset (eligible plant and machinery) within a period of 1 year from the date of subscription of equity shares.

­ The equity shares subscribed shall not be sold within 5 years (3 years in case where new asset is computer of computer software) from the date of acquisition.

­ If the amount invested is not utilized in purchase of new asset before the filing of return of the assessee, such amount shall be deposit in Capital gains account scheme.

Notes:

1. If the asset in which investment is made is transferred (or loan or advance is taken on security of such assets, for the purpose of section 54EC) before the time prescribed, the amount of exemption given earlier will be revoked and it shall be chargeable to tax as long-term capital gain in the year in which such specified assets are transferred

2. The amount of exemption for the purpose of section 54 and 54EC shall be upto

3. The amount of investment in specified asset if the amount of LTCG is more than the amount of investment; or

4. The amount of LTCG if the amount of investment made is more than the amount of Capital Gain

5. The amount of exemption for the purpose of section 54GB shall be allowed on proportionate basis. If the amount of the net consideration is greater than the cost of the new asset, then, so much of the capital gain as it bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged as the income of the previous year.

Author Bio

Qualification: Student - CA/CS/CMA
Company: Nangia & Co.
Location: Delhi, New Delhi, IN
Member Since: 06 Feb 2020 | Total Posts: 1

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3 Comments

  1. Nilesh says:

    Is there any condition of number of properties held by seller on the date of sale of residential property for which deduction u/s 54 to b claimed?

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