Section 54 of Income Tax Act PDF

PDF Name	Section 54 of Income Tax Act
No. of Pages	19
PDF Size	0.35 MB
Language	English
PDF Category	Government
Source / Credits	incometaxindia.gov.in
Uploaded By	Krishan

Section 54 of Income Tax Act - Summary

Exemption under Section 54 of the Income Tax Act can greatly help taxpayers by allowing them to claim relief on capital gains from the sale of a long-term residential property. To benefit from this exemption under Section 54, it’s essential that another house property is purchased within one year before or two years after the sale of the old house.

Understanding Exemption under Section 54 of Income Tax Act

When a person decides to change their home for various reasons, they may sell their old house and then use the money from that sale to buy a new one. Here, the person’s main aim is not to make money from selling their old house, but rather to find a better place to live. If this person had to pay income tax on the profit gained from selling their old home, it would be unfair.

This is where Section 54 becomes important. It provides relief to those who sell their residential house and use the money to buy another one. This section outlines the necessary conditions and guidelines that help in understanding how the exemption works.

Key Conditions for Claiming Section 54 Exemption

To successfully claim the benefits of Section 54, the following conditions must be met:

The exemption under Section 54 is exclusively available for individuals or Hindu Undivided Families (HUF).
The property being sold must be a long-term capital asset categorized as a residential house.
After selling the old house, the taxpayer needs to purchase a new residential property within one year before or within two years after the sale. Alternatively, they can construct a new residential property within three years from the date they sold the old house. In cases of compulsory acquisition, the timeline for acquiring or constructing the new house starts from the date the compensation is received.

You can easily download Section 54 of the Income Tax Act in PDF format from the link provided below. It’s a great resource to understand all the details better! 📄

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