04 January 2021
Thank you. One more query. I booked an under construction property in 2017 on loan and I will get possession in 2021 which I will move into. If I sell my other property where I am currently staying in 2021, would I be eligible for 54f exemption?
05 January 2021
Thank you. There is really confusion on whether allotment/booking date or registration date is being considered for computation on capital gain exemption under sec 54?
04 August 2024
Under Section 54F of the Income Tax Act, 1961, which provides exemption on long-term capital gains arising from the sale of any asset other than a residential house, the confusion often arises regarding the eligibility criteria under different tax regimes (old vs. new tax regime introduced in 2020) and whether the date of allotment/booking or registration date of the new asset is considered for computation.
### Key Points to Consider:
1. **Applicability of Section 54F:** - Section 54F allows individuals to claim exemption from long-term capital gains tax if the capital gains are invested in a new residential house property. - It is applicable if the taxpayer does not own more than one residential house, other than the new house, on the date of transfer of the original asset.
2. **Tax Regimes:** - **Old Tax Regime:** Allows deductions and exemptions under various sections of the Income Tax Act, including Section 54F. - **New Tax Regime (introduced in 2020):** Provides lower tax rates but eliminates most deductions and exemptions, including Section 54F.
3. **Date Consideration for Exemption:** - For Section 54F exemption, the crucial date is the date of transfer of the original asset (usually the date of sale). - The investment in the new residential house must be made either: - Within 1 year before the date of transfer of the original asset, or - Within 2 years after the date of transfer, or - Construct a residential house property within 3 years from the date of transfer.
4. **Confusion Regarding Dates:** - The confusion typically arises regarding the date of allotment/booking vs. registration date of the new residential house property. - Generally, for claiming exemption under Section 54F, the registration date of the new residential house property is considered, not the date of allotment or booking.
5. **Impact of New Tax Regime:** - If you opt for the new tax regime introduced in 2020, you forfeit the benefit of deductions and exemptions like Section 54F. - Under the new regime, only standard deductions and certain specified exemptions (like Section 80C deductions) are available.
### Conclusion:
- **Eligibility under Section 54F:** To be eligible for exemption under Section 54F, you must invest the capital gains in a new residential house property within the specified time frames relative to the date of transfer of the original asset. - **Tax Regime Choice:** Opting for the new tax regime introduced in 2020 will not allow you to claim exemptions like Section 54F. Therefore, if you plan to claim such exemptions, you should consider the implications before deciding on the tax regime. - **Date Consideration:** Focus on the registration date of the new residential house property for computation under Section 54F, regardless of the tax regime chosen.
For precise guidance tailored to your specific situation, especially regarding tax planning and investment decisions, it's advisable to consult with a qualified tax advisor or chartered accountant. They can provide detailed advice considering the latest tax laws and your financial circumstances.
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