Taxpayee must be aware about Exemption u/s. 54F and us/ 54EC on Long Term Capital Gain arising on sale of plot can be saved by claiming an exemption us/s. 54F and/or u/s. 54BC of Income Tax Act.
What is exemption U/s. 54F:
- For exemption u/s. 54F. subject to various other terms/stipulations, you have to invest the amount of net sales consideration for purchases of residential house property within a prescribed period.
- Exemption u/s. 54F is available on the basis of net sale consideration invested (and not on the basis of LTCG earned). If entire net sale consideration is not invested, exemption will be available on proportionate basis.
What is exemption U/s. 54EC:
To save LTCG tax u/s. 54EC, you are required to invest the amount of Long Term Capital Gain (LTCG) within a period of 6 months from the date of sale/transfer of assets in the specified bonds issued by REC/NHAI. There is a maximum celling of Rs. 50 Lakh in a financial year for investment in 54BC Bonds.
There is no specific restrictions/bar in claiming simultaneous exemption u/s. 54F and 54EC taken together. We are of the option that -
To save LTCG tax u/s. 54EC, you are required to invest the amount of Long Term Capital Gain (LTCG) within a period of 6 months from the date of sale/transfer of assets in the specified bonds issued by REC/NHAI. There is a maximum celling of Rs. 50 Lakh in a financial year for investment in 54BC Bonds.
There is no specific restrictions/bar in claiming simultaneous exemption u/s. 54F and 54EC taken together. We are of the option that -
- you can claim an exemption u/s. 54F towards investment in the residential house property and;
- also u/s. 54EC towards investment in the 54EC Bonds.
Isolated investment in the plot of Rs. 20 Lacs will not enable you to claim any exeption from long term capital gain.
