Table of Contents
1. What is section 54F of Income-tax Act?
Section 54F of Income-tax Act provides exemption of long term capital gain on sale of any capital asset (other than a residential house property).
2. Who can claim exemption under section 54F?
Only Individual / HUF can claim exemption under section 54F.
3. Whether exemption under section 54F can be claimed on transfer of short term capital asset?
No, the exemption is available only in respect of Long term capital Gain.
4. When can I claim exemption under section 54F?
Exemption under section 54F is available only when a capital gain arising from transfer of any capital asset (other than a residential house property) is invested in the purchase/construction of a new residential house property.
5. When should I purchase/construct the house in order to claim exemption under section 54F?
A residential house property should be purchased in India within 1 year before or 2 years after the date of transfer (3 years from date of transfer in case of construction).
6. When the assessee is not eligible to claim exemption under section 54F?
The exemption is not available if the assesse,
- Owns more than one residential house property as on the date of transfer (other than the new residential house).
- Purchases any residential house (other than the new residential house) within a period of 1 year after the date of transfer of original asset.
- Constructs any residential house (other than the new residential house) within a period of 3 years after the date of transfer of original asset.
7. What is the maximum amount of exemption under section 54F?
- If entire net consideration is invested, entire capital gain is exempt from tax.
- If the cost of new asset is less than net sale consideration of the transferred asset,
8. Can I transfer/sell the new residential house property that I purchased for claiming exemption under section 54F?
The new residential house property should not be transferred within a period of 3 years from the date of purchase or construction. If transferred, the capital gain exempted earlier would be taxable as long-term capital gain in the year of transfer.
9. What is capital gain account scheme?
Unutilised capital gain can be claimed as exemption by depositing the same in the capital gain deposit A/c scheme with any nationalised bank before the due date of filing return of income.
10. What if the amount in capital gain account scheme is not utilized within a specified period?
If the amount in the capital gain deposit A/c scheme remains unutilised for a period of two years (in case of purchase) or 3 years (in case of construction), then the unutilised amount will be taxable as long term capital gain in the PY in which the 2 years or 3 years as the case maybe expires.
11. Can I claim exemption under section 54F if I sell a residential house property?
No, exemption under section 54F can be claimed only on transfer/sale of any capital asset other than a residential house property.
12. Can I claim exemption under section 54F if I own more than one house property?
No. The exemption is not available if the assesse owns more than one residential house as on the date of transfer (other than the new residential house).
13. Can I claim exemption under section 54F if the new asset is purchased after filing of return of income?
- Yes, but the unutilized capital gain should be deposited in the capital gain deposit A/c scheme with any nationalized bank before the due date of filing return of income.
- If the capital gain is not deposited into the capital gain deposit A/c scheme, then the assessee cannot claim exemption under this section. (refer FAQ no 9,10)