Difference & Similarities in Section 54 & Section 54F in Capital Gain

Rukmani Gupta Rukmani Gupta Dec 25, 2019 1381 0



 

Difference & Similarities in Section 54 & Section 54F in Capital Gain

  1. What are the differences between section 54 & Section 54F?
  2. What are the similarities between section 54 & Section 54F?

  1. What are the differences between section 54 & Section 54F?

Following are the differences between section 54 & section 54F

    1. Section 54 applies when there is a sale of residential house property. While section 54F applies when there is a sale of property other than house property.
    2. Section 54 applies even if assessee owns more than 1 house property at the time of its sale but section 54F applies only if assessee owns not more than 1 house property at the time sale of original asset.
    3. In case of section 54, capital gain exemption is based on reinvested capital gain amount. In case of section 54F, the exemption is based on reinvested sale proceeds.
    4. In case of section 54, the reinvestment can be done in 2 house property if the capital gain does not exceed 2 cr (however he can take this option only once in lifetime), while in case of section 54F, the reinvestment can be done only in one house property.
    5. In case of section 54, there is no limit on further buying a house property but in case of section 54F, exemption would be taken back if the assessee purchases a new house property within 2 years of sale of original asset or construct a house property within 3 years of sale of original asset.
    6. In case of reversal of capital gain section 54 because of selling new house property within 3 years of its purchase, the exemption given would be deducted from the cost of acquisition of new asset, thereby it will impact as short term capital gain. While in case o section 54F if exemption is reversed in either case of sale of new house property or purchase of another house property, the exemption earlier given would be taxable as long-term capital gain in the previous year in which such reversal is made.
    7. In case of section 54, we can always reinvest the balance amount in bonds upto 50 lacs u/s 54EC, in case we are left with some amount of gain after investing in a house property. But in case of 54F, we can invest balance amount in 54EC only if the asset sold is land or building or both.

   

  1.   What are the similarities between section 54 & Section 54F?

Following are the similarities between section 54 & section 54F

    1. Both section 54 and 54F applies to Individual and HUF.
    2. In both section 54 & 54F, the reinvestment should be in a residential house property.
    3. In both the sections 54 & 54F, reinvestment can be 1 year before or 2 year after or 3 year after in case of construction of new house is allowed.
    4. In both the section exemption would be taken back if the newly purchased or constructed property is sold within 3 years of its purchase.
    5. In both the sections we have the option to deposit amount in the capital gain scheme account if we ae unable to reinvest it on or before due date of filing of return of income.






 

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