Section 54F of ITA, 1961 : Section 54F: Capital Gain On Transfer Of Certain Capital Assets Not To Be Charged In Case Of Investment In Residential House

Explanation using Example

Imagine Mr. Sharma sold a plot of land, which is a long-term capital asset, for a net consideration of ₹50 lakhs. With this money, he wants to invest in a residential house to save on capital gains tax. If within two years after selling the land, he purchases a new residential house for ₹50 lakhs or more, he can claim exemption on the entire capital gain under Section 54F of the Income Tax Act, 1961.

However, if Mr. Sharma only spends ₹30 lakhs on the new house, the exemption will be proportionate. That is, only the part of t...

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