Compulsory Acquisition and Long-Term Capital Gain: Exemption
21
Particulars
54D
Remarks
Applicability
Compulsory Acquisition of Industrial Undertaking
Eligible Assets
1.Land 2.Building 3.Both 4.Right in Building or Land
Condition
It must be Operative for immediately 2 years before the acquisition The investment must be for such a business.
The holding period for assets to be categorized as long-term is 24 Months i.e. 2 years.
Reinvestment in
1.Land or 2.Building or 3.Both or 4.Right in them This includes purchase /construction
The requirement is to invest in the resulting capital gains, not the entire sales consideration.
Period for Reinvestment
3 Years After the date of Transfer
-
Deposit in Capital Gain A/c Scheme (CGAS)
If the amount is not utilized Till the due date U/s 139(1) of filing ITR For a Maximum Period of 3 years
54H: Since the property is the subject matter of compulsory acquisition and if the compensation is not received by the assessee on the date of transfer, all applicable time limits will be calculated from the date the compensation is received.
Time limit for deposit in CGAS
Latest by the due date of filing the ITR U/s 139(1)
Unutilized Amount in CGAS
If not utilized within 3 years of deposit, it shall be treated as income of PY in which such time lapses.
-
Amount of Capital Gain (CG) Exemption
Lower of: 1.Capital Gains or 2.Investment made.
Tax Rates:Long term: Before 23-07-2024: 20% + Indexation Benefit On or After 23-07-2024: 12.5% , NO Indexation Benefit Short Term: As per Slab Rates
Cost of new Asset for exemption
Amount Spent + Deposit in CGAS
Lock in Period
3 Years
Sold during Lock in
The cost of the Acquisition of the new Asset shall be treated as: 1.NIL or 2.Reduced by CG value As the case may be.
Period of expiry to be counted from
The date of Transfer of the original asset
Recent Posts
Residential House and Long-Term Capital Gain: Exemption
Ans: USD fixed deposits function like regular fixed deposits but are held in US dollars (USD) instead of Indian Rupees (INR). This allows investors to earn fixed returns in a stable global currency while avoiding the risk of INR depreciation over time.
Ans: GIFT City (Gujarat International Finance Tec-City) is a smart city designed to cater to global finance, offering a tax-efficient and investment-friendly environment. It helps NRIs invest in foreign currencies while benefiting from India’s financial growth.
Ans: GIFT City is governed by IFSCA, which consolidates RBI, SEBI, and IRDAI regulations to ensure investor security.
Ans: No INR conversion needed – Invest directly in foreign currency.\nNo TDS – Unlike NRE/NRO accounts, withdrawals are tax-free in India.\nEasier repatriation – Direct fund transfers without RBI approvals.
Ans: Tax planning should start at the beginning of a financial year, as it enables individuals and businesses to settle their financial affairs and take advantage of the best tax-saving opportunities. However, you can still benefit from it at any time during the year.
