Can You Claim Section 54 and 54F Exemptions Simultaneously?

Section 54 and Section 54F of the Income Tax Act, 1961 (the Act) provide for exemption from tax on long-term capital gains (LTCG) arising from the sale of certain assets, subject to certain conditions. Section 54 provides for exemption on LTCG arising from the sale of a residential house property, if the taxpayer invests the sale proceeds in a new residential house property within a specified time frame. Section 54F provides for exemption on LTCG arising from the sale of any asset other than a residential house property, if the taxpayer invests the sale proceeds in a new residential house property within a specified time frame.

Can a taxpayer claim exemption under Section 54 and 54F at the same time?

The Act does not specifically prohibit a taxpayer from claiming exemption under Section 54 and Section 54F at the same time. However, the taxpayer must meet the eligibility conditions for both sections in order to claim the exemptions.

Example

Suppose a taxpayer sells a residential house property and a non-residential property in the same financial year, and makes a capital gain on both sales. The taxpayer can claim exemption under Section 54 on the LTCG arising from the sale of the residential house property, and claim exemption under Section 54F on the LTCG arising from the sale of the non-residential property, provided that the taxpayer invests the sale proceeds from both properties in a new residential house property within the specified time frame.

Important points to note

• The taxpayer cannot claim exemption under both Section 54 and Section 54F on the same capital gain.
• The taxpayer must invest the entire sale proceeds from the sale of the asset in a new residential house property within the specified time frame in order to claim exemption under Section 54 or Section 54F.
• The specified time frame for investment in a new residential house property is two years from the date of sale of the asset.
• If the taxpayer invests the sale proceeds in a new residential house property after the expiry of the specified time frame, the taxpayer will be liable to pay tax on the LTCG.

A taxpayer can claim exemption under Section 54 and Section 54F at the same time, provided that the taxpayer meets the eligibility conditions for both sections. The taxpayer must invest the entire sale proceeds from the sale of the assets in a new residential house property within the specified time frame in order to claim the exemptions.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.