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Applicability of Section 54 or 54F

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Siva

engineer

74 Points Posted on 13 June 2020

I have sold [12 years after the purchase] a residential plot which is there in gated community and I understand it is part of LTCG. Since it is a residential plot [no house constructed] should the income tax be claimed under which of the following.

1) Section 54 [Hope I can invest in Two Houses and also 54EC Bonds & Here Capital gain is based on Indexation]

2) Section 54F [Hope this allows to invest in Only one house and 54EC bonds & Here capital gain on full consideration]

There are different articles defining residential land as also house property. Please clarify.

Thanks in advance

Replies (10)

Quick Summary

This discussion explores the applicability of Section 54 and Section 54F of the Income Tax Act for capital gains arising from the sale of a residential plot held for 12 years. The primary question is whether to claim the exemption under Section 54 (requiring investment in two houses and/or 54EC bonds) or Section 54F (allowing investment in one house and/or 54EC bonds). Participants debate the definitions of residential land versus house property and the crucial time limits for claiming exemptions, with some suggesting the exemption might not be available due to exceeding the typical three-year window for reinvestment.

sabyasachi mukherjee

Profession Business

28246 Points Posted on 13 June 2020

Time limit has expired..
It's not 12 years but max 3 years

So u cannot avail exemption from capital gains.

PADMAKAR

153 Points Posted on 13 June 2020

As per my understanding,
Section 54F with the combination of Section 54EC , will be applicable as section 54 specifically mentions that long term capital gains have to be from house property whereas 54F mentions any long term asset other than house property.. here it's residential plot which may come under section 54F

sabyasachi mukherjee

Profession Business

28246 Points Posted on 13 June 2020

Time limit is the pertinent point.

PADMAKAR

153 Points Posted on 13 June 2020

Yes timelimit is for the case of exemption but not for the sale of long term capital asset..

rama krishnan

12244 Points Posted on 14 June 2020

@ sabyasachi, here Mr Siva referred the period of holding of residential plot

sabyasachi mukherjee

Profession Business

28246 Points Posted on 14 June 2020

@ padmakar

exemption conditions are being asked by the query.

refer to the querist.

rama krishnan

12244 Points Posted on 14 June 2020

@ sabyasachi
Time limit has expired..
It's not 12 years but max 3 years

So u cannot avail exemption from capital gains.

here is 👆reply... whether your reply is relevant to the query asked for?. the queriest asked whether the residential plot which was sold after holding it for 12 years will be eligible for 54 deduction or 54F deductions and Mr. padmakar has responded aptly to the query.

r u ca? if so I'm really pity on your clients.. based on your knowledge in taxation I'm sure that you can't be a CA but just bystander