01 December 2009
Mr.x and others has been offered by the builder for RS.45,000,00/-each for their residential houses. Now If MR.X receives the amount in chq. how he should proceed with that in-order to claim exemption u/s 54. 1)where to deposit the money 2)if the new resi-house is of Rs.59,00,000/- what would be the calculation. plz clarify. thank you.
02 December 2009
Hi John, I suppose that the the house is a long term capital asset for Mr. X. First calculate long term capital gain taking indexed cost of the house. now for availing exemption u/s 54 the following conditions must be satisfied : 1) transferred asset must be a residential house whose income is taxable under income from house prperty(i.e.no business asset) 2) to claim exemption new residential property must be constructed or purchased . if constructed, construction should be completed within 3 years from date of transfer. Keep in mind that exemption is not limited to one house. 3)if the amount can not be utilised till the due date of filing returns then it should be deposited in "capital gains deposit account scheme" and the proof of deposit must be submitted along with the return to get exemption. if the cost of new house is Rs. 59,00,000 then assessee will get full exemption u/s 54. there will be no long term capital gains tax. exemption u/s 54 (long term capital gain) will be deducted from it and the balance will be considered as cost of new house.
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