capital gain

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TRANSFER OF RESIDENTIAL PROPERTY – CAPITAL GAINS AND EXEMPTIONS
UNDER SS.54 & 54F
BY

MS. JANANI SHANKAR, Student, NALSAR & Trainee, SAPR Advocates
Ms.B.Mala, Senior Associate, SAPR Advocates

Note : The scope of this article is restricted to examining certain aspects of LongTerm Capital Gains which arise during transfer of residential property.
TABLE OF CONTENTS
1.

Capital Gains

2.

Computation of Long-Term Capital Gains
(i)Computation of cost of acquisition /cost of improvement in case of residential property acquired by gift or inheritance.

3.

Capital Gains Arising on Transfer of Residential Property
I. Profit on sale of property used for residence – Section 54
II. Capital gain on transfer of certain capital assets in case of investment in residential house – Section 54F
III. Capital Losses to be computed after deductions under Ss. 54 & 54F

4.

Incidence of Capital Gains under various scenarios
(i) Scenario 1 : Whether exemption can be claimed under Ss.54 and
54F when capital gains derived from transfer of a single residential property is used for purchasing multiple residential properties
(ii) Scenario 2 :Whether exemption can be claimed under Ss.54 and
54F when capital gains from transfer of multiple properties are invested in a single residential property
(iii) Scenario 3 :Whether deduction can be allowed under Ss.54 and 54F when capital gains are invested in re-modelling or addition of floors to an existing property
(iv) Scenario 4 :Whetherdeduction can be allowed under Ss.54 and 54F when capital gains are invested in residential property outside India
(v)Scenario 5 : To claim exemption under Ss.54 &54F, whether investment in new asset or deposit in CGDS should be out of the actual sale consideration.
(vi) Scenario 6: Whether the procurement of plot within the time limit prescribed is sufficient to claim benefits under Ss. 54 and 54F?

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(Vii) Scenario 7:Whether exemptions u/s. 54F can be claimed