Capital Gains Exemption under section 54

Section 54 is one of the most important sections for practical as well as theoretical clarity of income taxable under the head "Capital Gains:

The following are the conditions to be satisfied for claiming exemption under section 54:

1. This Exemption is applicable only to Individual or HUF.

2. Only if capital asset whose income is taxable under the head "Income from House Property" is transferred.

3. Asset(Residential House Property) must be long term capital asset(holding period>3 years).

4. New purchase or construction must be of "Residential House Property" within India or abroad.

5. The following time limit is to be followed :

--Purchase of new property ---1 year before or with 2 years after the date of transfer

--Construction of new property ----- To be completed within 3 years of the date of transfer

Amount of exemption will be :

Amount of capital gain generated less amount invested(qualified amount as above)

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