Monday, April 16, 2012

CAPITAL GAIN EXEMPTION 54,54B,54EC,54F AT A GLANCE


on Monday, April 16, 2012


Capital gain on sale of certain assets is exempted on purchase/construction of specified assets under section 54,54B,54EC,54F subject to few conditions.These exemption has been tabulated on the basis of following points.
  1. Who can claim exemption 
  2. Eligible assets sold 
  3. Assets to be acquired for exemption
  4. Time limit for acquiring the new assets
  5. Exemption Amount
  6. Whether "Capital gain deposit account  scheme" applicable

So it is easy to understand these exemption at a glance . Further these exemption are in depended to each other and person can claim combination of two ,if he is eligible otherwise.



Long Term Capital Gain - Exemption
a.
Who can claim exemption
Ind/HUF
Individual /HUF added by Finance Bill 2012 wef fy 12-13
Any person
Ind/HUF
b.
Eligible assets sold
A residential
House property
(minimum holding period 3 year)
Agriculture land which  has been   used   by   assessee himself or by his parents for agriculture purposes during last 2 yrs of transfer
Any   long-term capital assets (minimum holding period 3 years) 
Any long term asset (other  than  a residential  house  property ) provided on the date of transfer the taxpayer does not own more than one residential house property from  the assessment year 2001-02 (except the new house)
c.
Assets to be acquired for exemption
Residential house property
Another agriculture land
(urban or rural)
Bond of NHAI or
REC
Residential house property
d.
Time limit for acquiring the new assets
Purchase :1 year back or
2    y e a r   f o r w a r d , Construction:   3   year forward
2 yrs forward
6 months forward
Purchase :1 year back or 2 year forward, Construction:
3 year forward
e.
Exemption Amount
Investment in the new assets or capital gain, which ever is lower
Investment in
the agriculture land or capital gain, which ever is lower
Investment   in   the new assets or capital gain,  which  ever  is lower (Max. Rs.  50
Lacs in Fin. Yr.)
Investment in the new assets / Net
Sale consideration X capital gain
f.
Yes
Yes
not applicable
Yes

Kindly note that rural agricultural land is fully exempted from tax as it is not covered under capital assets definition under income tax act. Agricultural land in the 54B above is other than rural agricultural land.
Rural Agricultural land means an agricultural land in India:
  1. if situated in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town committee or by any other name) and its population should be less than 10,000 as per the last published census, or
  2. if situated outside the limits of municipality, etc., it should be situated certain kilometers away from the local limits of any municipality, etc. as may be specified by the Central Government in the Official Gazette. The Central Government can notify urban land upto maximum 8 kms from the limits of municipality, etc.