To help you with what are capital gains deductions, let me tell you that, capital gain deductions help taxpayers reduce their taxable income arising from the sale of capital assets like property or securities.
Are Capital Gains Tax Deductible?
There are multiple ways through which you can claim a deduction or exemption on your capital gains.
Under Section 54 of the Income Tax Act, long-term capital gains (LTCG) from selling a residential property can be exempted if the proceeds are reinvested in another residential property within specified timelines. The new property must be purchased one year before or two years after the sale, or constructed within three years to claim the deduction.
For those not buying property, Section 54EC allows investment in bonds issued by NHAI or REC within six months to save tax, with a maximum limit of Rs. 50 lakh per financial year.
Short-term capital gains (STCG), where the asset is held for less than 24 months (36 months for immovable property), do not qualify for Section 54 benefits but may be offset against capital losses.
Additionally, Section 54F provides relief if the sale proceeds of any long-term asset (other than a house) are used to buy a residential property.
Understanding these provisions helps you to minimise liabilities while complying with tax laws. Proper documentation and adherence to deadlines are crucial to avail these deductions effectively.
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What Is Capital Gain Deductions?
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2025-05-24T06:22:30+00:00 2025-05-24T06:22:32+00:00Comment
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