Summary of Exemption from Capital Gain

If the taxpayer invests the sale proceeds of one capital asset to purchase the other specified capital asset/s within the specific time, then he/she can claim the benefit of exemption.

Following are the various exemptions provided by the Income-tax Act:

Particulars Section 54 Section 54B Section 54D Section 54EC Section 54F Section 54GB
Who can claim Individual or HUF Individual or HUF Any person who is having industrial undertaking Any person Individual or HUF Individual or HUF
Nature of asset sold Long term residential house Agricultural land Industrial Undertaking compulsorily acquired by the Government Any capital asset Any long term capital asset (except residential house) Residential House Property
Nature of asset to be purchased to claim exemption Another residential house property in India Another agricultural land in India New Industrial Undertaking in India Bonds of specified companies New residential house property in India (Person should not own more than 1 house property on the date of sale) Equity shares of Eligible business**
Period within which new asset to be purchased One year before the date of sale OR

within two years after the date of sale OR

within three years after the date of sale

Within two years after the date of sale Within three years after the date of compulsory acquisition Within six months after the date of sale of an capital asset One year before the date of sale OR

within two years after the date of sale OR

within three years after the date of sale

Before due date of filing of return
Amount of Exemption Capital gain on old house or Investment in new house, whichever is lower Capital gain on old agricultural land or Investment in agricultural land, whichever is lower Capital gain on old Industrial Undertaking or Investment in new Industrial Undertaking, whichever is lower Capital gain on capital asset sold or Investment in specified bonds, whichever is lower.

[However maximum exemption is Rs. 50,00,000/- for that capital asset]

Cost of new house divided by sale consideration of capital asset sold multiplied by capital gain Cost of Shares divided by sale consideration of capital asset sold multiplied by capital gain
Lock in period* Three years Three years Three years Three years Three years Five years

Some important terms you should be aware of-

*What is Lock-in period: The period during which the taxpayers are not allowed to sell the new capital asset is called as “lock-in period”. If a taxpayer has sold the asset within lock-in period, the exemption claimed in previous years’ shall gets cancelled. And he will have to pay capital gain in the year of default.

**Eligible business: Eligible business means taxpayer is required to start a new company with new plant & machinery using the proceeds of capital asset sold. Taxpayer should have atleast 50% shares in the new company.

Click here to know about “Capital Gains”.

Summary
Article Name
Summary of Exemption from Capital Gain
Description
Exemption from Capital gain is available under section 54,54F,54B,54GB, etc. Exemption under these sections are available upon fulfillment of certain conditions.
Author
Publisher Name
myITreturn
Publisher Logo

Leave a Reply

Your email address will not be published. Required fields are marked *