Capital gain sec 54f

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Dimple (Querist)

14 March 2012 If the assessee has sold a commercial property on 14.03.2012 which was purchased on 13.10.2006
i.e. long term capital asset.
Sale consideration : 3100000
-Indexed cost
(947550*785/519) 1433192
Capital Gain: 1666808
Tax on LTCG 333362
he wants to construct a residential property for claiming exemption u/s 54F
Pls guide what amount should he invest in the construction of property?
Is it the Capital Gain part or Net consideration 3100000?
What if he puchase a new house?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)

14 March 2012 Only capital gain part has to be invest i.e Rs.16,66,808 or more but the exemption amount would be decreases from the cost of construction or purchase of property.
OM SAI SRI SAI JAI JAI SAI

CA Dileep Surya Kumar

CA Dileep Surya Kumar (Expert)

15 March 2012 Deduction U/S 54 F allowed proportionally so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration.

-It means he is required to invest total net consideration to save tax( RS.31,00,000).

-Otherwise proportionate captital gain will be allowed as deduction

Formula

Dedduction U/S 54F=Long term captital Gain * (cost of new House/Net consideration)

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