Deduction u/s 54

Ofcoarse...

Its STCG dear

sorry dhiraj but i think to get exemption U/s 54 the asset must be a long tem asset......do check it

Dear Friends,

Plz check the below mentioned info for your ready reference.

How to minimize Capital Gain Part – 1: Capital Gain from Transfer of a Residential House-Exemption of Capital Gains u/s 54

Introduction
Any long-term capital gains arising on the transfer of a residential house (including self-occupied house) will be exempt from tax if,

Conditions
1) If the assessee has within a period of one year before or two years after the date of such transfer purchased, or within a period of three years constructed, a residential house.

2)The assessee must not transfer the new house, within a period of three years from the date of its purchase or construction, as the case may be. Otherwise the exemption allowed under this section
shall be reduced from the cost of the new house, in computing the capital gains arising therefrom.

3)If the whole or any part of the capital gain cannot be so utilised for acquisition a residential
house before filling the return, the same should be deposited in Capital Gains Accounts Scheme, 1988 in order to claim exemption, beforethe due date for furnishing the return.

How much amount will be exempt?
The amount of exemption available is equal to the amount so utilised or the amount of capital gain, whichever is less.

If the amount of capital gain is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction, provided that the acquisition of plot and also the construction thereon, are completed within the specified period as aforesaid.

In simple words, capital gains shall be exempt to the extent it is invested in the purchase and/or construction of another house.

regards,

ratan

Thanx krutika for correcting me.. Actuall, just concentrated on gain being ST... didnt remember about non-applicability of sed 54

Dear Sanjay,

House and land are to be considered separately.

House is short term capital asset = it will cause short term cap gain. It cant be indexed. It cant be avoided by re-investment of the gain.

Land is long term = it wil cause long term cap gain. It can be indexed from year of purchase iof land.

Dont make deed to sell the house.

Make the deed to sell your land.

When the land is sold, building being immoveable property standing on land, automatically gets transferred. Resultant entire gain will be long term.

Claim deduction u/s 54F by re-investing the proceeds of sale of land.

I think above answer is precise.very good student.

Dear G.K. Anna.........

I agree with your answer partly.........

i.e. Land - Long term Capital Asset and Building - Short Term Capital Asset..........

Building - STCG arises , therefore no exemption.....

Land - LTCG so, Indexation benefit and 54 F exemption (in present case).....

According to me....The Building and Land should be shown in some ratio i.e.40% - 60% or 30% 70%....

The Net consideration from Land should be invested in Res. house to claim 54F exemption........

The Gain from sale of Building will be treated as STCG.......

Please post your replies G.K....Anna....

Ya balaji,

bld results in ST CG, land will be resulting in LT CG...

Land and building are distinct and are to be considered separately...

That was the decision in Alps theatre vs CIT...

Dear G.K. Anna....

Please post the Decision of Alps theatre vs. CIT......

https://www.icai.org/resource_file/7925final_dt_nov06.pdf

Search for "alps" pls:)

Also

/sc/c/CIT%20vs%20Alps%20Theatre(SC).asp

Thank You Mr. G.K.Anna........