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Applicability of S. 54F of Income Tax Act

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Nupu

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32 Points Posted on 28 September 2021

1. On 5-Nov.-2019 - Mr. Anand bought a residential flat with consideration amount - Rs. 60 lakhs. This is his first flat / residential house.

2. On 10-Nov-2019 - Mr. Anand bought 10,000 shares of Rs. 50 per share of ABC company.

3. On 1-Dec-2020- The values of Shares of ABC company is Rs. 400 per share. Net Capital Gains is - Rs. 35,00,000/-

As per applicable LTCG tax - Rs. 3,40,000/- should be submitted as LTCG Tax.

WHETHER Mr. Anand can take the benefit of section 54F as it talk about purchase of residential house before one year also ?

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Quick Summary

This discussion examines whether Mr. Anand can claim relief under Section 54F of the Income Tax Act after selling shares. He purchased a residential flat before selling shares that generated a significant capital gain. The key question is whether the timing of the flat purchase relative to the share sale impacts eligibility for the Section 54F exemption, which relates to investing capital gains in a new residential house.