Query regarding to sec.54 F

[pratik jain]

Dear Sir,
my query is relating to section 54F of Income Tax Act.

My client has long term capital gain of Rs. 30 lakhs from sale of Gold, he has purchased a house 1 year before for Rs. 35 Lakhs by borrowing loan from bank of Rs. 25 lakhs. All the conditions of section 54F are satisfied, I want to know what will be exemption he get?

Formula of 54F = 35,00,000*30,00,000/32,00,000

or = 10,00,0000*30,00,000/32,00,000

Which is correct for taking exemption

Pleas suggest me.

AI Summary

Clarification on Section 54F: Entire Rs. 30 Lakh Capital Gain Non-Taxable if House Investment Exceeds Net Consideration from Gold Sale. A query was raised regarding the application of Section 54F of the Income Tax Act concerning a client's long-term capital gain of Rs. 30 lakhs from selling gold. The client had purchased a house for Rs. 35 lakhs, financed partly by a Rs. 25 lakh bank loan. The question was about the correct formula to calculate the exemption. A respondent clarified that if the net consideration from gold is Rs. 32 lakhs and the house investment is Rs. 35 lakhs, the entire capital gain is non-taxable if the loan is repaid within the prescribed period. Another expert noted that loan repayment timing is irrelevant for claiming the deduction under Section 54F.