Types of Capital Assets :

Types of Capital Gains :

Tax on Capital Gains :

Exemptions of Capital Gains

➡️ Exemption u/s 10

The following are the exemptions in respect of Capital Gains u/s10 :

1. Exemption of Capital Gain on transfer of unit of Unit Scheme, 1964 (US 64) [Sec. 10(33)]
2. Exemption of Capital Gain on compulsory acquisition of agricultural land situated within specified urban limits [Sec. 10(37)]

➡️ Exemptions u/s 54 / 54B / 54D / 54EC / 54F / 54G / 54GA 

Exemption of Capital Gains u/s 54, 54B, 54D :

Sec. 54 :

• Where during any assessment year, the assessee has exercised the option to purchase or construct two residential houses in India, he shall not be subsequently entitled to exercise the option for the same or any other assessment year.
• This implies that if an assessee has availed the option of claiming benefit of section 54 in respect of purchase of two residential houses in Jaipur and Jodhpur, say, in respect of capital gains of ₹1.50 crores arising from transfer of residential house at Mumbai in the P.Y.2023-24 then, he will not be entitled to avail the benefit of section 54 again in respect of purchase of two residential houses in, say, Pune and Baroda, in respect of capital gains of ₹1.20 crores arising from transfer of residential house in Jaipur in the P.Y.2026-27, even though the capital gains arising on transfer of the residential house at Jaipur does not exceed ₹2 crore.

Exemption of Capital Gains u/s 54EC, 54F, 54G :

Sec. 54EC :

• Long-term specified asset means specified bonds, redeemable after 5 years, issued on or after 1.4.2018 by the National Highways Authority of India (NHAI) or the Rural Electrification Corporation Limited (RECL) or any other bond notified by the Central Government in this behalf.

Sec. 54F :

• Amount utilised by the assessee for purchase or construction of new asset and the amount so deposited shall deemed to be the cost of new asset. The deemed cost of new asset would be restricted to ₹10 crores for the purpose of exemption under section 54F.
• The assessee should not own more than one residential house on the date of transfer.

Exemption of Capital Gains u/s 54GA, 54GB, 54EE :

It is pertinent to note that :

For Sec. 54, 54B, 54D, 54G & 54GA, the Cost of Acquisition of the new asset is reduced by the amount exempt from tax under those sections & thereby the exemption granted is withdrawn as STCG irrespective of the original capital gains.

But in case of Sec. 54EC, 54F, 54GB, 54GEE the amount exemption claimed earlier will be taxed in the year of violation & cost of acquisition of the new asset will not be affected.