Section 54F: Capital Gain on Transfer of any Long Term Capital Assets (Other than Residential House Property)

Exemption is allowed provided the Assessee has long term Capital Gains on transfer of any long term Capital Asset (other than residential house property) and purchase new house property.

Section 54F of Income Tax Act - Capital gain exemptions

Conditions:

  • The taxpayer (i.e. seller) needs to be an individual or HUF.
  •  Firms, LLP’s and companies cannot utilize the benefits of this section.
  • New investment should be made in residential house property.

ADDITIONAL CONDITIONS

  1. 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
  2. If the amount in CGAS is not utilized within the prescribed time limit, such unutilized amount will be taxable as capital gains
  3. The individual/HUF cannot own more than 2 house property (i.e. existing house property and new house property).

Computation of exemption amount

Cost of new asset *capital gain /net consideration (maximum up to capital gain)

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