please exlpain me the implications of sec 54 practically ,
10 Replies
(Guest)
Under section 54 of the Act, an individual or a Hindu Undivided Family is allowed to reinvest long term
capital gains arising from the sale of residential house ("the original asset") for purchase or construction of another residential house("the new asset"). The purchase of the new asset could be one year before or two years after the sale of the original asset and the construction could be within three years of sale of the original asset. The capital gain is required to be reinvested. If only a part of the capital gain is reinvested, only pro-rata exemption is made available.
Prasanth Nair V
(ACA,ACS,CWA Final,Mcom)
(557 Points)
Replied 15 March 2010
Transfer of Residential House Property and should buy a new property within 2 years of sale of old or construct a new one within 3 years from the sale of old...
Vishwas V Rao
( Chartered Accountant)
(239 Points)
Replied 15 March 2010
well sec 54 has many provisions lik
54 B werin as explained above a RHP is sold n proceeds are invested in a new RHP, provided the assessee doesnt own any RHP. the construction should b completed within 3 yrs n in case of acquistion either a year ago or 2yrs ahead. the new RHP should b held for atleast 3 yrs, else the exemption claimed would b taxed
54D. urban agriculture land acquired n the proceeds are invested in another agriculture land provided agriculture was carried on for past 2 yrs. the new agriculture land should b held for 3 yrs
54EC. any long term asset is sold n d proceeds r invested in specified bonds. the bonds should b held for 3 yrs and the amt should b invested within 6 months. max limit 50L
54FLTCG arising from transfer of asset other than RHP to be invested in a new RHP.The amount should b invested in a capital gain savings deposit ac.cnstruction should b completed within 3 yrs or acquisition backward 1 n forward 2 yrs. exepmtion amt. cap gain*amt invested/net consideration. holding period 3 yrs.
54G cap gain arising due to shiftin of industrial undertakin i.e sale of land and building forming part of industrial undertaking from urban area to rural area. provided new plant or land n building is acquired within 3 yrs or backward 1 yr and holding period is 3 yrs
54GA same as 54G exception bein shiftin to a SEZ
R!tu Ber!
(Chartered Accountant)
(405 Points)
Replied 15 March 2010
please tell me what if the new RHP is sold before the prescribed time limit please explain with example
Vishwas V Rao
( Chartered Accountant)
(239 Points)
Replied 15 March 2010
the exemption claimed u/s 54 would b reduced from the cost of acquisiton of the new RHP
n btw messed up the sec a lil
54 RHP for RHP
54B urban agriculture invested in another agri land
54D urban industrial undertakin invested in another industrial undertakin....
rest r correct
Vishwas V Rao
( Chartered Accountant)
(239 Points)
Replied 15 March 2010
hope its clear.....sry jus got confused with the sections
R!tu Ber!
(Chartered Accountant)
(405 Points)
Replied 16 March 2010
its jus sec 54 in which rhp sold is considered as STCG i m asking it in that context that position in which the exemption clained is withdrawn n las CG exempted is taxable pls explain wid example
R!tu Ber!
(Chartered Accountant)
(405 Points)
Replied 16 March 2010
its jus sec 54 in which rhp sold is considered as STCG i m asking it in that context that position in which the exemption clained is withdrawn n las CG exempted is taxable pls explain wid example
(Guest)
If the new residential house is transfered within a period of 3 yrs from hthe date of its aquisation (or completion of construction )
, the amount of exemption given earlier would be taken back.In such a case , the capital gain on transfer of the new residential propoerty will be calculated a follows
sale consideration of the new residential propoerty xxxxx
less: cost of aquisation (original cost of acquisation
of the new residential property - exemption given earlier xxxxxx
.................
Short Term Capital gain .................
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