Income Tax || Section 54 Exemption for Capital Gain

SECTION 54 EXEMPTION FOR CAPITAL GAINS

A person wanted to shift his residence due to certain reason, hence, he sold his old house and from the sale proceeds he purchased another house. In this case the objective of the seller was not to earn income by sale of old house but to acquire another suitable house. If in this case the seller was liable to pay income-tax on capital gains arising on sale of old house, then it would be a hardship on him. Section 54 gives relief from such a hardship. Section 54 gives relief to a taxpayer who sells his residential house and from the sale proceeds he acquires another residential house

54 Section applicable only for the asset transferred should be a long-term capital asset, being a residential house property

Please follow the steps below t o enter 54 exemption detail

Step 1:

Go into transactions → Capital Gain Head → Land/ Building → Residential House:

Step 2:

Now Fill Exemption Detail:

Step 3:

Now you will be able to see, 54 exemption detail:

Exemption under section 54 can be claimed in respect of capital gains arising on transfer of capital asset, being long-term residential house property. Exemption under section 54 will be lower of following :

(A) Amount of capital gains arising on transfer of residential house; or

(B) Amount invested in purchase/construction of new residential house property.

Step 4:

Check in itr form - Schedule CG > D Information about deduction claimed against Capital Gains:

Hope This Helps.