It has now been proposed that Exemption from Capital Gains u/s 54 and 54F is allowed when invested in only One residential house.
So if a person sells a property or land of higher value and invests them in more than one residential house in the same location (same address), he will get exemption only for one of such houses.
Isn't this provision deafeating the basic purpose for which the exemption is granted?
Yes, these amendments are proposed from AY 2015-16 onwards. In fact these amendments have been proposed to nullify the effect of various judgments in favor of the assessee where section 54 and 54F was interpreted to mean more than one residential house. But now this has been clarified. In my opinion there is nothing wrong in restricting the benefit to one house only. Even in wealth tax if an assesee has more than one house, only one house is exempt as self occupied. In income tax also, only one house is treated as self occupied and the other one is treated as deemed to be let out by taking notional rental income even if the same has not been rented. So the proposed amendments are in agreement with the intention of law.
This will force the sellers to sell their property that will have more portion of black to reduce LTCG.
Instead, they should have increased the limit from 50 lacs to 1 cr in 54EC bonds in one FY.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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