GOOD OPPORTUNITY FOR INDIVIDUAL OR HUF PERTAINING HOUSE PROPERTY

 

  PROFIT ON TRANSFER OF HOUSE PROPERTY USED FOR RESIDENCE (SECTION 54) OF THE INCOME TAX ACT 1961 (“the Act”)



Provision prior to amendment

Long term capital gain arises on the transfer of residential house property exempt U/S 54 if following conditions are satisfied.

i) Transfer a residential house property.
ii) Transfer long term capital asset and there is long term capital gain.
iii) Asset is transfer by an individual or HUF
iv) Assessee has purchased one residential house property in India within one year before or two years after the date on which transfer took place or constructed the same within 3 years after the date of such transfer.

 If an individual or HUF sale one residential house property then he can invest only in one residential house property for claiming exemption U/S 54 

Provision after the amendment made by finance bill 2019 w.e.f. A.Y. 2020-21
Now long-term capital gain arises on transfer of residential house property exempt U/S 54 if following conditions are satisfied.

i)                    Transfer a residential house property.
ii)                   Transfer long term capital asset and there is long term capital gain.
iii)                 Asset is transfer by an individual or HUF.
                            
                          Here extra benefit to the asseessee

                iv)             If the amount of long term capital gain is upto rupees 2 crore , the asseesee has option to 
                                  purchase or construct two residential houses in India, within one year  before or two year
                                  after the  date on which transfer took place or constructed the same within 3 years after
                                  the date of such transfer.

Conclusion:  


 if an individual or HUF sale one residential house property , arise long term capital gain upto amount  of rupees 2 crore and invest such amount at his option to purchase or construct two residential house property in India instead of one . this benefit is available only when the capital gain does not exceed rupees 2 crore. further, this benefit is available only once in a life time.





Author

CA Pooja Shukla FCA
RYPS & ASSOCIATES LLP
Website:www.ryps.in
Contact No: 9810505547

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