| Is there
any relief from tax arising on transfer of long-term capital
assets under the Income Tax Act, 1961?
- Capital Gains on sale of property used for residence
Section 54 of the Income Tax Act provides relief to an individual
or Hindu Undivided Family from capital gains arising from
transfer of a residential house held by the assessee for a
period of 36 months. Such capital gains to the extent utilised
for purchase (within 1 year before or 2 years after the date
of sale) or construction (within 3 years of date of sale)
of a residential house is exempt u/s 54. If the amount of
capital gains is proposed to be utilised, but is not so utilised
upto the due date for filing of return then, the amount of
unutilised capital gain is required to be deposited in the
"Capital Gains Account Scheme, 1988".
Capital Gains on transfer of capital assets other than
a residential house
Section 54F of the Income Tax Act exempts long term capital
gains arising from transfer of any long term capital asset
other than a residential house. Such capital gains to the
extent utilised for purchase (within 1 year before or 2 years
after the date of sale) or construction (within 3 years of
date of sale) of a residential house is exempt u/s 54F. To
be entitled to this exemption the assessee should not own
more than one residential house other than the house sold
as on the date of transfer.
The provisions of depositing the unutilised capital gain in
the "Capital Gains Account Scheme, 1988" as explained above
is also applicable.
Capital Gains not to be charged on investment in specified
assets
Section 54EC of the Income Tax Act provides relief from capital
gains arising from transfer of a long term capital asset (i.e.
an asset held by the assessee for a period of 12 months in
case of shares/units and 36 months in other cases). For claiming
this exemption, the capital gains has to be invested (within
6 months of date of transfer) in notified bonds issued by:
- National Bank for Agriculture and Rural Development (NABARD)
- National Highways Authority of India
- Rural Electrification Corporation Ltd
- National Housing Bank
- Small Industries Development Bank of India (SIDBI)
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