Wether investment allowable u/s 54 F
This query is : Resolved
18 June 2009
I have a house property, & during the P.Y. I have a LTCG on sales of shares without paying STT i.e. outside stock exchange.Now wether I can avail exemption u/s 54 F by investing the consideration in reconstruction in my existing house or acquiring a new house property.
Wether there is any way other then investing in bonds so that I can avoid tax on sale of shares.
Wether there is any way other then investing in bonds so that I can avoid tax on sale of shares.
18 June 2009
u can claim exemption under section 54F and also in 54EC
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19 June 2009
Sir,
As far as I am concerned the proviso to Sec 54 F says that
"Provided that nothing contained in this sub-section shall apply where
(a) the assessee,
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property.]"
So in the above said proviso of 54 F (a) (i) says that the assesse sholud not own even a single house at the time of transfer wether I am right or not, & If I am right then the in the given case assesse would not avilable to claim the deduction.
As far as I am concerned the proviso to Sec 54 F says that
"Provided that nothing contained in this sub-section shall apply where
(a) the assessee,
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head Income from house property.]"
So in the above said proviso of 54 F (a) (i) says that the assesse sholud not own even a single house at the time of transfer wether I am right or not, & If I am right then the in the given case assesse would not avilable to claim the deduction.
03 August 2025
You’ve pointed out a crucial proviso under Section 54F which is often misunderstood.
Key points about Section 54F exemption:
Section 54F applies to long-term capital gains arising from transfer of any asset other than a residential house.
To claim exemption, the assessee must NOT own more than one residential house on the date of transfer of the original asset.
If the assessee owns more than one residential house (other than the new asset intended for investment), exemption will NOT be allowed.
Also, if the assessee purchases or constructs any other residential house (other than the new asset) within the specified period (1 year purchase or 3 years construction), exemption will be disallowed.
The new asset here means the new residential house bought or constructed to claim exemption.
In your case:
You say you have one house property already.
Since you already own one residential house, you are not eligible for exemption under Section 54F if you sell a non-house asset (like shares).
Section 54F requires you to have no other residential house on the date of transfer except the one you are investing in.
Regarding LTCG on sale of shares without STT:
Exemption under 54F applies to capital gains from any asset except residential house.
However, LTCG on shares without STT are taxable under capital gains but section 54F exemption will not apply if you already own a residential house.
Section 54EC offers exemption on LTCG if you invest in certain bonds (like REC, NHAI) within 6 months, which you mentioned.
To summarize:
Your understanding is correct: If you own even a single residential house (other than the new asset), Section 54F exemption is not available.
Alternative to avoid tax on LTCG on shares without STT is limited to Section 54EC investment in bonds.
Key points about Section 54F exemption:
Section 54F applies to long-term capital gains arising from transfer of any asset other than a residential house.
To claim exemption, the assessee must NOT own more than one residential house on the date of transfer of the original asset.
If the assessee owns more than one residential house (other than the new asset intended for investment), exemption will NOT be allowed.
Also, if the assessee purchases or constructs any other residential house (other than the new asset) within the specified period (1 year purchase or 3 years construction), exemption will be disallowed.
The new asset here means the new residential house bought or constructed to claim exemption.
In your case:
You say you have one house property already.
Since you already own one residential house, you are not eligible for exemption under Section 54F if you sell a non-house asset (like shares).
Section 54F requires you to have no other residential house on the date of transfer except the one you are investing in.
Regarding LTCG on sale of shares without STT:
Exemption under 54F applies to capital gains from any asset except residential house.
However, LTCG on shares without STT are taxable under capital gains but section 54F exemption will not apply if you already own a residential house.
Section 54EC offers exemption on LTCG if you invest in certain bonds (like REC, NHAI) within 6 months, which you mentioned.
To summarize:
Your understanding is correct: If you own even a single residential house (other than the new asset), Section 54F exemption is not available.
Alternative to avoid tax on LTCG on shares without STT is limited to Section 54EC investment in bonds.
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