IN THIS BLOG RELIEF MEANS DEDUCTIONS, Deductions, as we all know, is a sum which is reduced from the amount of tax or taxable amount, in order to provide a benefit or relief to the assessee on whom the tax or taxable amount is computed. Deductions under head Capital Gain are all related to long-term gains and not short-term gains. Now coming to the deductions under head Capital Gains which is dealt under section 54.

Under section 54

Eligible Assesse: Exemption available to an individual and hindu undivided family (HUF).

The eligible asset sold: – residential house property (holding period of minimum 3 years).

The asset to be acquired for exemption – residential house property.

Time limit for acquiring the asset – purchase: 1 year back or 2 years forward; construction: 3 years forward from the date of transfer.

Exemption amount – invested an amount in the new asset or capital gain whichever is lower.

Under Section 54B

Eligible Assessee: Exemption available to Individual.

The eligible asset sold – agricultural land which has been used by the assessee himself or by his parents for agricultural purposes during the last two years before transfer.

The asset to be acquired for exemption – any other agricultural land (Urban or rural).

Time limit for acquiring the asset – 2 years from the date of sale.

Exemption amount – investment in the agricultural land or capital gain whichever is lower.

Under Section 54EC

Eligible assessee: Exemption available to any person.

Eligible asset sold – any long-term capital assets (minimum holding period of 3 years)

The asset to be acquired for exemption – bonds of National Highway Authority Of India (NHAI) or Rural Electrification Corporation (REC).

Time limit for acquiring the asset – within 6 months from the date of sale.

Exemption amount – investment in the new capital asset or capital gain whichever is lower. (Limit of Rs. 50 lakhs in a year)

Under Section 54F

Eligible assessee: Exemption available to individual and Hindu undivided family (HUF).

The eligible asset sold – any long-term asset (except a residential house property) provided on the date of transfer the person does not own more than one residential house property applicable from the assessment year 2001-02 (except the new house).

The asset to be acquired for exemption – residential house property.

Time limit for acquiring the asset – purchase: 1 year back or 2 years forward; construction : Eligible assessee: 3 years forward from the date of transfer.

Exemption amount – will be as per the given formula: Investment in
New Asset/Net sales Consideration X Capital Gain

Capital Gain Deposit Scheme

Under this scheme, the assessee can deposit the sum received from the sale of the capital asset in a special account called capital gain deposit scheme, if he doesn’t want to immediately use the sum for the given purposes as above. After a specified time he can utilize it for claiming the exemptions as available. This account is opened in bank and sum deposited in this account until utilized. This scheme is applicable to section 54, 54B and 54F but not to section 54EC.