Nov16
2015Section 54 | Section 54F |
To claim full exemption the entire capital gains have to be invested. | To claim full exemption the entire sale receipts have to be invested. |
In case entire capital gains are not invested – the amount not invested is charged to tax as long-term capital gains. | In case entire sale receipts are not invested, the exemption is allowed proportionately. [Exemption = Cost the new house x Capital Gains/Sale Receipts] |
This exemption will be reversed if you sell this new property within 3 years of purchase and capital gains from the sale of the new property will be taxed as short-term capital gains. | This exemption will be reversed if you sell this new property within 3 years of its purchase or construction OR if you purchase another residential house within 2 years of the sale of the original asset or construct a residential house other than the new house within 3 years of the sale of the original asset. Capital gains from the sale will be taxed as long-term capital gains. |
PARTICULARS | SEC 54 | SEC 54F |
Exemption claimed by | Individual /HUF | Individual /HUF |
Capital Asset | Long Term | Long Term |
Eligible Specific Asset | Residential House | Any LTCA other than a residential house property, provided on the date of transfer of asset, the tax payer does not own more than one residential house property |
Type of asset to be acquired to get the benefit of exemption | Residential House | Residential House |
Time limit for acquiring the asset from a date of sale | 1. Purchase before 1 year or 2 yrs after. 2. Construction within 3 yrs |
1. Purchase before 1 year or 2 yrs after. 2. Construction within 3yrs |
Relevant date for acquiring the new asset | From the date of transfer of house property but in case of compulsory acquisition from the date of compensation | From the date of transfer of capital asset but in case of compulsory acquisition from the date of receipt of |
Amount exempted | Investment in the new asset or capital gain, whichever is lower. | Investment in the new asset/net sale consideration capital gain |
Revocation of Exemption in a subsequent year | If the new asset is transferred within 3 yrs of its acquisition. | If the new asset is transferred within 3 yrs of its acquisition. If another residential house is purchased within 2 yrs of transfer of the original asset, or If another residential house is constructed within 3 yrs of the transfer of original asset. |
When the exemption is revoked it is taxable as LTCG / STCG in the year in which the default is committed | Short Term Capital Gain | Long Term Capital Gain |
Capital Gain Deposit Scheme | Applicable | Applicable |