Exemption Under Section 54
When an individual sells a residential property and buys another residential property, he will be eligible for exemption under Section 54.
- The taxpayer (i.e. seller) needs to be an individual or HUF.
- Firms, LLP’s and companies cannot utilize the benefits of this section.
- Assets Sold should be long term means assets should be in the possession for more than 24 month.
- New Assets should be purchased within 1 year or 2 year after transfer or construction within 3 years after transfer.
- New Purchased Asset should be residential house.
- If new asset is sold within 3 years, amount earlier exempted under this Section will be reduced from its COA to calculate capital gains thereon.
- If the amount in CGAS is not utilized within the prescribed time limit, such unutilized amount will be taxable as capital gains.