Capital gain exemption under section 54 of income tax act

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venkateswarlu Avvaru (Querist)

13 August 2014 My client ( NRI) bought two residential flats at different point of time out of salary income earned abroad. Assets are long term assets.
Now he decided to disposeoff one of the property in Sep/Oct 2014. The Capital gains appx 40 Lakhs. He wants to buy another residential flat which exceeds the sale proceeds of the flat being sold.

Quries:-
1. Though he has two flats, can he claim exemption under Section 54 as he is investing into another residental flat. The New flat will be ready in 2016. For new flat he has to pay advance of INR 40 Lakhs.
2. though he has two flats, can he take benefit of 54 for one of his flats as per his choice by not claiming exemption benefit for other flat. This way he still claims benefit for one house only.
3. If exemption benefit not available under 54, what are other modes available so that he gets exemption from Capital gains tax.
Thanks
Venkat

Rupesh Jain

Rupesh Jain (Expert)

13 August 2014 your client can but one more house for u/s 54 for new house with three year construction or buy within two year.

venkateswarlu Avvaru

venkateswarlu Avvaru (Querist)

13 August 2014 Thanks Rupesh. Are you saying that NRI can claim exemption by buying new residential flat ( despite the fact he already owned one more flat)?. thanks for your clarification

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