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.
- 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.
- 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
- 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)