Published By: Business Desk
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To acquire all the exemption, the online sale proceeds should be invested. (Representative picture)
If you promote an asset aside from a residential property and have lengthy-time period capital good points, you’ll be able to declare Section 54F.
Adding a partner’s identify to the possession of a flat is sort of widespread. It is necessary to notice that there are quite a few advantages to a current ruling made by the Income-tax Appellate Tribunal’s (ITAT) Mumbai department lately.
According to the ITAT, when a partner sells one other asset (akin to shares, land, and so on.) and reinvests the sale earnings in one other flat, it won’t have an effect on their capacity to say tax advantages beneath part 54-F of the Income-tax (I-T) Act, which pertains to lengthy-time period capital good points, Times of India reported.
What is Section 54F?
The IT Act’s Section 54F permits an exemption on capital good points from the sale of any type of property, excluding residential properties. The following necessities should be met for this exemption to use: The taxpayer should use the online gross sales proceeds from the earlier property to finance the acquisition of a brand new residential dwelling. The following necessities should be met for this exemption to use.
To buy a brand new residential dwelling, the taxpayer ought to use the online gross sales quantity of the earlier property.
The new residential property must be:
- Purchased: both two years or a 12 months and a half after the asset was offered or
- Built: in three years following the sale of the earlier asset
The taxpayer could solely personal the residential property that was bought to qualify for this part’s exemption on the date of sale.
Section 54F may be claimed: Read how?
On lengthy-time period capital good points from the sale of any asset aside from a residential property, Section 54F could also be claimed. To be eligible for the complete exemption, all the web sale earnings should be invested.
If a taxpayer sells any asset (aside from actual property) and makes lengthy-time period capital good points, they’ll make investments the online sale proceeds in residential actual property and keep away from paying capital good points taxes. The quantity of the exemption relies on the cash used to buy the brand new dwelling. The exemption is proportionate if the funding exceeds the online sale consideration.
You should meet particular necessities to be eligible for this exemption. For newbies, on the date of the unique asset’s sale, the taxpayer isn’t allowed to carry multiple residential property (other than the brand new dwelling during which the funding is being made).
