hamburger
×
Digit General Insurance Logo
Powered By Digit
mobile-img

Check Credit Score for FREE

Instant in 2 Mins. No Impact on Credit Score

desktop-img

Section 54 of the Income Tax Act about Capital Gains Exemption

What Is Section 54 of the Income Tax Act?

What Is Short Term Capital Gain & Long Term Capital Gain?

What Are the Exemptions Allowed Under Section 54 of Income Tax Act?

Illustration

Mr. X sells his residential property for ₹ 45,00,000 and the indexed cost of such residential house property assumes 10,00,000.  proceeds to purchase a new villa for ₹ 20,00,000. Accordingly, his capital gain will be calculated as follows.

Particulars

Amount

Sale Consideration

₹ 45,00,000.00

Less Indexed Cost of acquisition

₹ 10,00,000.00

Long term Capital gain on selling residential property

₹ 35,00,000.00

Investment made in residential property (Difference)

-₹ 20,00,000.00

Balance – Capital gains

= ₹ 15,00,000.00

According to the exemptions under Section 54 of the Income Tax Act, whichever is lower between the capital gain and the investment in new property, will be exempted from taxation. Therefore, in context to the example given above, the investment made in residential property, that is, ₹ 20,00,000, will be exempted from the taxation.

Who Is Eligible to Claim Deduction Under Section 54 of the Income Tax Act?

What Are the Provisions Relating to the Transfer of Property After Claiming Benefit Under Section 54?

What Is Capital Gains Account Scheme?

FAQs about Section 54 of Income Tax Act