In case, we sell Any Capital asset except Residential House,earn LTCG and later purchase another Rsidential House,

Then LTCG on Sale of House will be  exempt


Conditions to be Fulfilled

  • Deduction is available only to Individual and HUF
  • This deduction is on LTCG only (Not STCG)
  • Sale of any asset except Residential House covered (Even sale of plot of land covered)
  • Person should invest the amount of LTCG in purchasing new property or Construction of a new property


Time Period

  • If Purchased:-1 year before or 2 year after date of transfer
  • If Constructed:-Within 3 years after date of transfer


Amount Exempt is

(Amount Invested /Total Consideration)*LTCG


Question 1

Jewellery purchased by Mr A for 10 lacs  in June 2010 sold for 20 lacs in July 2015

Expenses on Transfer Rs 14000

House Purchased in Aug 2015 for Rs 14 lacs

CII for 2015-16 is 1081 and 2009-10 is 632

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Solve last question assuming Jewellery was purchased on June 2014

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Consequences if New Asset Sold within 3 years

If Section 54 benefit claimed,new house should purchased should not be transferred for 3 years.

If transferred,then

STCA will be calculated on Sale of New House

Amount of Capital Gain Exempt earlier will be reduced from Cost while Calculating this STCA



Suppose in  Q1 above,new House which was purchased for 2000000 in May 15 was later sold for 2400000 in August 2016

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CA Maninder Singh

CA Maninder Singh is a Chartered Accountant for the past 14 years. He also provides Accounts Tax GST Training in Delhi, Kerala and online.