Exemption towards Long Term Capital Gain (other than a Residential House)

Exemption towards Long Term Capital Gain (other than a Residential House)

The assessee needs to satisfy the following conditions in order to avail exemption under section 54F of the Income Tax Act –

  1. An exemption under section 54F is available only to an individual or a Hindu Undivided Family (HUF).
  2. An exemption is available towards the capital gain arisen on the transfer of any long-term capital asset other than a residential house.
  3. The ‘net consideration’ arisen on the transfer of long term capital asset is invested in either of the following manners –
  4. The amount is invested to purchase one residential house in India. It is compulsory that such investment is made within a period of 1 year before or 2 years after the date of transfer; or
  5. The amount is invested, within a period of three years, to construct one residential house in India.

Net consideration means the full value of the consideration received on account of the transfer of long term capital assets reduced by any expenditure exclusively incurred in connection with the transfer.

Frequently Asked Question

Que. : Who can avail of the exemption of 54F Individual or HUF or company?

Ans. : Individual or HUF

Que. : What is the time limit for the purchase of house property?

Ans.  : Within 1 year before a transfer or 2 years after transfer or construction  should be completed within 3 years after the date of transfer

Que. : If the assessee is having more than 1 residential house property other than a new asset? 

Ans. : No, as per sec 54F capital gain exemption is not available in this condition

Que. : Exemption under sec 54F is available under LTCG or STCG

Ans. : This exemption is available under LTCG

Que. : If any Assess transfer within a period of 3 years then exemption claim under sec 54F what will happen of exemption?

Ans. : Exemption claim under sec 54F treated as LTCG taxable under the head capital gain In the previous year in which the residential house is transferred

Que. : If any assessee not utilized the full amount of investment within a time period. what will be the Provision?

Ans. : If any assessee not utilized the amount then can he open the capital gain A/c Scheme then deposited in this up to the due date of return filing under 139(1)

Que. : Whether sec 54 F or 54 use at the same time?

Ans. : Section 54 and 54F are mutually exclusive and cannot be used at the same time.

Que. : How to computed exemption for capital gain

Ans. : LTCG * Purchase amount/ net consideration

Que. : Can I claim exemption us 54f for repayment of a home loan?

Ans. : The LTCG being used to repay the home loan is considered to be fulfilling the criteria set under Section 54 and Section 54F, and thus you are permitted to claim an exemption on the entire LTCG amount.

Que. : Whether exemption under section 54F would be allowable where the assessee is already a co-owner of another flat?

Ans. : The word ‘own’ appearing in section 54F includes only such a residential house which is fully and wholly-owned by one person and not a residential house owned by more than one person. The assessee was already a co-owner of another flat. Being a co-owner, the assessee was not the absolute owner of another residential flat, and exemption under section 54F could be denied

Que. : Whether property purchase under section 54f in the foreign country exemption is available?

Ans.   No, the exemption is not available

Que. : Where the minor has transferred an asset, will the exemption under section 54F be allowed to the minor or the parent?

Ans.: Yes, the exemption is available to the parents of the minor child. The exemption is not denied to parents because he is having resident house property

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