Income tax capital gains exemption

OUR CLIENT SOLD ONE RESIDENTIAL HOUSE AND OTHER LONG TERM CAPITAL ASSET OTHER THAN SHARES AND LIABLE TO CAPITAL GAINS TAX U/S.54 & 54F OF THE INCOME TAX ACT,1961. HE WANTS TO GET THE CAPITAL GAINS EXEMPTION BY PURCHASING OR CONSTRUCTING A NEW HOUSE WITH IN THE STIPULATED PERIOD AS PER THE PROVISIONS OF THE INCOME TAX ACT,1961. NOW THE QUESTION IS THAT WHETHER PURCHASE OF ONE NEW HOUSE CAN BE CLAIMED AS EXEMPTION FOR BOTH SEC-54&54F SIMULTANEOUSLY TO THE EXTENT OF THE NEW INVESTMENT. PLEASE SUGGEST ME.
Replies (3)

In my opinion, assessee can claim both the exemption i.e u/s 54 and 54F if conditions of both the provision are satisfied. The basic reason in this regard are as follows:

 

1. It is settled principal that section 54 and 54F are relief mechanism and therefore, if the conditions are fulfilled , the exemptions are allowable.

 

2. There is nothing in the Act that prohibits claim under section 54 & 54F simultaneoulsy. In fact , conditions under both the section is different and therefore both these provisions are for different situation. Hence , if conditions of the said provisions are fulfilled , claim of exemption shall lie. Further, anywhere in the above sections it is not stated that exemption claimed in respect of an asset under this section cannot be claimed under other section of the act.

 

However, it must be ensured that the total amount of exemption should not exceed the capital gain earned by the assessee. 

 

Regards,

Shraddha

 

Krishna ji,

 

The assessee can claim both the exemption on single new house, provided the conditions are satisfied.

 

e.g. Mr. X owns a self-occupied residential house and a plot of land. (he has no other house) he sells the house on 31.01.2007 for 6,50,000/-(purchased on 31.01.2002 for 4,00,000/-) and plot of land on 15.02.2007 for 5,00,000/- (purchased on 30.03.2002 for 2,00,000/-). He purchased a new residential house on 25.04.2007 for 5,00,000/-.

 

For calculation please find the attached file.

In the above case, first exemption u/s 54 is claimed and fully utilised. Then balance of cost of new house has been claimed against section 54F.**

** It’s been noted that u/s 54F exemption can be claimed as under

[Cost of new house * CG / net consideration]

 

members please correct me if I'm wrong.

 

Members, Please refer to this attachment.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
16 September 2026
Internal Audit - Team Lead

Consulting & Beyond

Chennai

CA

View Details
Company
26 September 2026
Chartered Accountant

pushpganga ventures

Pune

CA

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details
Company
10 October 2026
Accounts Associate Level 1

Abic and Mani Chartered Accountants

Kottayam

B.Com

View Details
Company
22 September 2026
Account Assistant

Chirag P Shah & Co. Chartered Accountant

Pune

B.Com

View Details
Company
12 October 2026
Chartered Accountant - Internal Audit

HKC | Chartered Accountants & Business Advisors

Ludhiana

CA

View Details
Company
ARTICLESHIP 07 October 2026
Article assistant

S.K.Bajpai & Co.

Noida

B.Com

View Details
Company
08 October 2026
SALES TELECALLER

HIRE NOVA

Lucknow

Graduate (Any)

View Details