Question: As you mentioned in your Article, Long-term capital gains (LTCG) arising from the sale of any capital asset other than a residential house can be claimed as exemption under section 54F if the sale proceeds are invested in residential house property, So subject to the time limit mentioned therein. This section is silent as to what type of long-term capital asset is envisaged when it says “Capital gain arising from transfer of any long-term capital asset, not being a residential house “I have a huge LTCG from debt mutual funds during the last financial year and the same is going to happen in the current financial year as well. In view of the above, I am curious to know whether I can reinvest the LTCG earned from debt. fund in a residential flat within next 2 years. I also want to know whether I can claim refund for tax paid on LTCG for AY 2021-22 in future.- P Acharya
Answer: The purpose of claiming exemption under section 54F includes all capital assets except a residential house, for which a separate exemption under section 54 is available. Hence exemption for long-term capital gains can be claimed on sale of all capital assets, including debt funds, by investing in residential house property within the specified time frame.
Please note that for the purpose of claiming exemption from long-term capital gains on sale of residential house property, you need to invest only the calculated amount of capital gain, the cost inflation index, on residential house property under section 54. For claiming exemption in respect of long-term capital gains arising from the sale of any property other than residential house property under section 54F, while after applying the It is necessary to invest the full amount of the sales consideration. So if you want to avail exemption under section 54F, you have to invest the redemption proceeds of the debt fund in residential house property.
If you have already paid tax on your long-term capital gains, there is no provision under the law to claim refund of such tax, even if you buy the house within the specified time period. However, if you are planning to buy/construct a house property within the stipulated time frame, you can deposit the amount to be invested in a bank account to be opened under Capital Gains Scheme account with the authorized bank and filing You can claim the discount while doing so. ITR to be filed for assessment year 2021-2022. Even if you have already filed ITR, you can revise ITR and claim refund if you deposit the amount in the above account by 30th September 2021, FY 2020 Extended due date for filing ITR for 2021.
Balwant Jain is a tax and investment specialist and can be contacted on Twitter at jainbalwant@gmail and @jainbalwant.
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