Section 54 - Capital Gain on transfer of Residential Property. - Income Tax - Ready Reckoner - Income Tax

Section 54 - Exemption on Capital Gain on transfer of Residential Property Assessee Individual/HUF Nature of Asset Long-term capital asset Asset to Transfer Residential House Property (RHP) being Building land appurtenant there to New assets to be purchased or constructed One Residential House Property in India ( in case Capital gain exceeds ₹ 2 crore) Two Residential House Property in India ( in case Capital gain does not exceeds ₹ 2 crore) Time limit Purchase : Within 1 year before or 2 years after the date of transfer; and Construction : To be completed within 3 years after the date of transfer. Capital Gain Deposit Scheme Available, to be deposit before due date of ROI u/s 139(1) . Quantum of Deduction Lower of: - a) Capital Gains, or b) Cost of New Asset/Deposit Amount Transfer Condition If such New Asset transferred within 3 Years from the date of purchase or construction, then Cost of Acquisition of New Asset to be reduced by capital gain exemption availed. Threshold Limit for Exemption ₹ 10 Core Where the amount of capital gain exceeds ₹ 2 Crore Where the amount of capital gain exceeds ₹ 2 crore, One Residential House in India should be - Purchase with in 1 year before 2 year after the date of transfer or Constructed within a period of 3 year after the date of transfer Where the amount of capital gain does not exceeds ₹ 2 Crore Where the amount of capital gain does not exceeds ₹ 2 crore, the assessee i.e. Individual or HUF, May at his option Purchase Two Residential House in India with in 1 year before 2 year after the date of transfer or Constructed Two Residential House in India within a period of 3 year after the date of transfer where the cost of new asset exceeds ₹10 crore, the amount exceeding ₹10 crore shall not be taken into account for the purposes of section 54(2). [ Proviso added as per FA, 2013 ] Where during any assessment year, the assessee has exercised the option referred to in the first proviso, he shall not be subsequently entitled to exercise the option for the same or any other assessment year. Therefore, now the exemption can be claimed for purchase/construction of 2 RHP instead of 1. This benefit is available only when the capital gain does not exceed ₹ 2 Crore. Further, this benefit is available only once in a life time. Its means the maximum exemption that can be claimed by the assessee u/s 54 is ₹ 10 crore.