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Exemption under Section 54F of Income Tax Act on Sale of Any Long-Term Capital Asset Except Residential House

Who can Claim:

This section is only applicable for Individual assessee 

Conditions to claim Exemption: 

a) Assessee should Purchase or construct a Residential house. 

b) The time limits for purchase or construction of Residential house: 

i) In case of Purchase:


ii) In case of Construction:


Max. amount of Exemption is:

a) The complete amount of capital gain can be taken as exemption, if:

 Value of residential house >/= Net Consideration from the sale of Capital asset

b) Only proportionate amount of capital Gain can be taken as exemption, if:

Value of residential house < Net Consideration from the sale of Capital asset

How to calculate Proportionate Amount:

Formulae:


Certain other conditions for applicability of this section:

a) The assessee should not receive any income under the head “Income from House Property” (other than the residential house purchased or constructed for this purpose)

b) The Residential House should not be sold/transferred within the Lock-in-Period (i.e. Three years from the Date of Purchase or from the Date of Completion of Construction)

c) The assessee should not have any other house property other than the residential house.

d) Assessee should not purchase another Residential house within 2 Years or should not have constructed another Residential house within 3 Years from the date of transfer of the capital asset.

Violation of any conditions:

The amount of capital gain taken as exemption will be considered as an income received under the head “Income from Capital Gains” in the Financial Year in which the conditions are violated.