Property Sale and Long-Term Capital Gain: Exemption
21
Particulars
54EC
Remarks
Applicability
To All assessee’s
-
Eligible Assets
1.Land, 2.Building, or 3.Both Residential, Commercial any is eligible!
The holding period for assets to be categorized as long-term is 24 Months i.e. 2 years.
Reinvestment in
Bonds issued by: 1.Indian Railway Finance Corporation (IRFC) 2.Rural Electrification Corporation (REC) 3.Power Finance Corporation (PFC) 4.Any other bonds notified by the Govt.
54H: If a property is the subject matter of compulsory acquisition and 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.
Conditions
1.The total investment cannotexceedRs.50 lakhs, even if: a.More than 1 assets are sold during the PY b.The sale spans in 2 FYs Rs. 50 Lakhs is the cumulative limit 2.Further, 80C on the same amount cannot be claimed. 3.Capital Gains need to be reinvested.
Period for Reinvestment
Within six months after the date of transfer.
Amount of Capital Gain (CG) Exemption
Lower of: a)The amount of capital gains b)The bond amount, subject to a maximum cap of Rs. 50, 00,000/-.
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
Lock in Period
For Bonds Issued: Before 01-04-2018 = 3 Years After 01-04-2018 = 5 Years
Sold during Lock in
Capital Gain Earlier Exempted Shall be taxable in PY in which Asset is sold.
Pledging & Deemed Income
Pledging bonds are treated as a sale, and the exempted capital gain becomes taxable in the year of pledging.
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