Exemption u/s 54 F

[SANDEEP TANWAR]

Dear Friends

Assessee has LTCG on Residential Plot now if he invests in Residential house property i.e purchasing a plot and then constructing on it.and also buys a shop (commercial property) whether the exemption under 54 F is available to assessee on investing in above said Residential house property

Your opinion will be of great help

Thanks & Regards

Sandeep Tanwar

[Ganeshan Kalyani]

FYI.

54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two yearsafter the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,-

(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45. ;

(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45.

Thanks.

AI Summary

Capital gain exemption under section 54F applies when sale proceeds are reinvested in a residential house meeting timing and cost tests. Exemption under section 54F applies where an individual or Hindu Undivided Family with long term capital gain from a non residential capital asset purchases a residential house in India within one year before or two years after the transfer, or constructs one within three years after. If the new asset's cost is at least the net consideration, the whole capital gain is exempt; if less, exemption is proportionate to the ratio of the new asset's cost to the net consideration.