Blog > Section 54F of Income Tax-Conditions To Claim Exemption on Long Term Capital Gain

Section 54F of Income Tax-Conditions To Claim Exemption on Long Term Capital Gain

by Varun Advani | 25 June 2015

Exemption from capital gains on transfer of a long –term capital asset other than a house property [Sec.54F]- Following are the conditions to be met in order to claim an exemption.

 

Who can claim exemption

An individual or a HUF

Which specific asset is eligible for exemption

Capital gain arising on transfer of many any long –term capital asset (other than a residential house property) is qualified for exemption provided on the date of transfer the taxpayer does not own more than one residential house property (except the new house property given below)

Which asset the taxpayer should acquire to get the benefit of exemption

One residential house property in India

What is time limit of acquiring the new asset

Purchase –Residential house can purchased within 1 year before or within 2 years after transfer

Construction-residential house can be constructed within 3 years from the transfer.

How much is exempt

Investment in new asset ÷ Net sale consideration × Capital Gain. Amount of exemption cannot exceed capital gain

Is it possible to revoke the exemption

In the following cases, exemption will be taken back (and the amount of exemption earlier will become long-term capital gain of the year in which the taxpayer commits the following default)

 

If the new asset is transfer red within 3 years from the date of its acquisition

If within 2 years from the date of transfer of the original assets, the taxpayer purchases anther residential house property in India or outside India

If within 3 year from the date of transfer of original asset, the taxpayer completes construction of another residential house property in India or outside India.

 

 

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