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Exemption u/s 54 of Income Tax

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Abhay Gupta

37 Points Posted on 26 January 2021

I am a CA Inter Student and started the chapter of Capital Gain

I learnt that if the assessee's LTCG is upto 2 Crore then he can purchase 2 Residential House Property and can claim exemption (Amendment by Finance Act 2019). I just wanted to clarify that suppose the LTCG = 1 Crore 50 Lakh (Less than 2 Crore) and he purchases a House of 50 Lakh and deposit the rest (1 Crore) in CGAS A/c before Return Filing. Can he claim exemption for that 1 Crore also saying that he will purchase another house next year ?

Thank You!!

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Quick Summary

This discussion clarifies the exemption available under Section 54 of the Income Tax Act for long-term capital gains (LTCG) when investing in two residential properties. Even if the LTCG is below £2 crore, an assessee can invest a portion in one house and deposit the remainder in the Capital Gains Accounts Scheme (CGAS). The exemption for the deposited amount can be claimed later when the second house is purchased in the subsequent assessment year.