Section 54 in Income Tax Act of India allows tax exemptions for capital gains earned from transfer of property ownership. However there are certain conditions that are applicable to avail exemption under Section 54. The government has also specified the amount of exemption as per Section 54. I will talk about all of this in the answer below. Keep reading :)How do I claim exemption under section 54?To claim exemption under section 54, you will have to fulfill a few conditions. If you fulfil these conditions, you can easily claim exemption under Section 54 of Income Tax Act while filing your ITR. The conditions are as follows:
The exemption is available for individuals or Hindu Undivided Family
The exemption is available for long-term capital asset and it should be a residential property
The seller of the property must acquire another residential property within 24 months of the sale of the property.
Earlier, the rules said that you can claim exemption if you own just one property in India. However, the amendments made in financial year 2021-22, says that the benefit of exemption can be given if you own two residential properties.
The residential property must be purchased in India and not abroad.
If an individual is unable to invest in a new residential property immediately, then he/she can deposit the capital gains in the Capital Gains Deposit Scheme.
If you abide by the conditions mentioned above, you can claim exemption under section 54 of Income Tax Act while filling your income tax return.It is important for you to know how to calculate capital gains in order to make the right calculations and proceed with the exemption claim. You can click on the link given below to checkHow to calculate long term capital gain on property?
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How do I claim exemption under Section 54?
Harinder
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May 7, 2021
2021-05-07T13:01:51+00:00 2021-05-07T18:26:01+00:00Comment
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