Encourage investment in residential property by offering tax exemption on capital gains in Clause 86 of the Income Tax Bill, 2025 vs. Section 54F of Income Tax Act, 1961

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....reinvested in residential property. This commentary seeks to provide a detailed analysis of these provisions, comparing the proposed changes in the 2025 Bill with the existing framework under the 1961 Act. Understanding these provisions is crucial for taxpayers, legal practitioners, and policymakers as they navigate the complexities of capital gains taxation and the incentives provided for reinvestment in residential property. Objective and Purpose The primary objective of both Clause 86 and Section 54F is to encourage investment in residential property by offering tax relief on capital gains. The legislative intent is to promote housing development and provide individuals and Hindu Undivided Families (HUFs) with a financial incentive to ....

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....able. 5. Monetary Limits: - Exemptions are capped if the cost of the new asset or net consideration exceeds ten crore rupees. Comparison with Section 54F of the Income Tax Act, 1961 Similarities - Both provisions target individuals and HUFs and require reinvestment in residential property within similar timeframes. - The calculation of exemption based on the proportion of reinvestment relative to net consideration is consistent across both provisions. - Both sections impose conditions on owning multiple residential properties and require deposits of unutilized gains. Differences 1. Monetary Caps and Adjustments: - Clause 86 introduces a cap of ten crore rupees on the cost of the new asset and net consideration, which is a mor....