Section 54 Exemption for Residential House

Example

In case,we sell Residential House,earn LTCG and later purchase another Rsidential House,

Then LTCG on Sale of House will be  exempt

Conditions to be Fulfilled

• Deduction is available only to Individual and HUF
• This deduction is on LTCG only (Not STCG)
• Only Sale of Residential House covered (Residential House means Building and land appurtenant to building, vacant land not covered)
• Income from Such House should be chargeable under Income from House Property
• Person should invest the amount of LTCG in purchasing new property or Construction of a new property

Time Period for Purchasing New House

• If Purchased:-1 year before or 2 year after date of transfer
• If Constructed:-Within 3 years after date of transfer

Amount Exempt is

• Amount of Long Term Capital Gain
• Amount Invested

whichever is lower

Q7 A

Mr. Sagar, a resident individual acquired a plot of land at a cost of Rs. 75,000 in June,

1999. He constructed a house for his residence on that land at a cost of Rs. 1,25,000 in the

financial year 2001-02.

He transferred the house for Rs. 15,00,000 in May, 2015 and acquired another residential

house in June, 2015 for Rs. 8,00,000.

 He furnishes other particulars as under

Cost inflation index details are given below:

Financial Year     Cost Inflation Index

1999 – 2000             389

2001 – 2002             426

2015 – 2016            1081

Compute Income from Capital Gain of Mr. Sagar for the assessment year 2016-17.