Capital gains-whether taxable

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This discussion clarifies whether capital gains are taxable in the UK, particularly when the income falls below the taxable limit. It explains that if your total income, including capital gains, is below the taxable threshold, the gains themselves are not taxed. While Section 54 investments are for claiming exemptions, they are not necessary if the gains are not taxable. The advice also touches upon scenarios where gains exceed the taxable limit, suggesting paying the tax might be more beneficial than investing in property under Section 54, unless you are actively purchasing or constructing a new residential property.

Sonnal Khandaray

Sonnal Khandaray (Querist)
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12 November 2021 Hi All

One of my clients is having income as only from capital gains.
Income is below taxable limit. Whether it is taxable?
Whether investments u/s. 54 is to be done to claim exemption?

Thanks in advance.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 November 2021 NO. It will not be taxable.
Investment u/s. 54 will not be necessary, if not taxable; better file return.

Sonnal Khandaray

Sonnal Khandaray (Querist)
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12 November 2021 Suppose in the same case, if Rs. 50000 is taxable. whether it is necessary to make investment u/s.54?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 November 2021 NO.
Better to pay 20% tax on that 50K, rather than investing in any house property.

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PARAS CHHAJED

PARAS CHHAJED

(Expert)
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13 November 2021 If you are in the process of buying / constructing other residential house, then you may claim deduction u/s 54 in respect of Long-Term Capital Gain against sale of residential house. If the gain has arisen from sale of any capital asset other than residential house, then you may claim deduction u/s 54F or invest the capital gain in bonds u/s 54EC.

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