Personal Finance
The section 54 provides exemption only in case of purchase or construction of one residential house property
Updated : Aug 14, 2018, 06:50 AM IST
Section 54 provides that the capital gains arising on the sale of a long term capital asset being a residential property shall be exempt from capital gain if the said capital gains are reinvested in another house property within stipulated time period. The section 54 provides exemption only in case of purchase or construction of one residential house property. Therefore, you will not be able to claim exemption under section 54 if you purchase two plots of land. Moreover, claiming the exemption of the property purchased in the name of children could be litigated by the tax officer as the section does not specify any provision.
To support the purchase of property, you may furnish the registered sale deed and loan agreement before the tax officer initially. However, if the tax officer desires to verify the purchase further, the other remaining documents can be furnished as and when required by the tax officer. It is advised to seek help of a consultant who would have a deeper insight of the facts.
In the event of sale of Employee Stock Options (ESOPs) or shares received under employee benefit schemes, the difference between the sale consideration and the fair market value (FMV) on the date of exercise would be taxable as capital gains. The capital gains could be long term/ short term depending upon the period of holding.
The writer is partner, Nangia Advisors LLP
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