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Section 54f

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Aarthy

student

103 Points Posted on 13 December 2011

section 54F of IT act

if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45.

what does this mean????

Replies (4)

Z

Tax Consultation (US and India)

2970 Points Posted on 13 December 2011

It means amount of exemption is calculated as

LTCG X amount INVESTED in NEW residential property / Net consideration

Total LTCG (before exemption) less amount calculated as above is the amount treated as chargeable LTCG (if no other exemption is availed)

CA LALIT WADHWA

FRESHER

105 Points Posted on 13 December 2011

lets take an example...

sale considration-10 lakh

coa-9 lakh

capital gain on above-1 lakh..

new residential house purchased of 5 lakh..

now capital gaim exempt=1lakh *5 / 10=50000

(cap gain* value of new asset purchased/sale considration)

CA Ketan Waghela

Partner at Elite Educare

356 Points Posted on 14 December 2011

I agree with the others,

Even if the cost of the new house is less than the CG, exemption will be allowed as per "investment in new asset * CG / net consideration"(the balance will be taxable as CG) and not the full value of asset.