Exemptions of Capital Gains

Exemption is nothing but a reduction from the capital gain which is taxable, on which tax will not be levied and paid.

The exemptions of capital gains are provided in the following cases under sec 10, 54, 54B, 54D, 54EC, 54ED, 54EF, 54F & 54G as follows:

• Exemption of capital gains on compulsory acquisition of agricultural land
• Exemption of LTCG arising from sale of shares and units
• Exemption of capital gain on transfer of an asset of an undertaking engaged in the business of generation, transmission, distribution of power
• If house property that is transferred is used for residential purpose
• House property was a long term capital asset
• If agricultural land used by an assessee to purchase another agricultural land within a period of 2 years after the date of transfer
• Any capital gain arising to an individual undertaking from the compulsory acquisition under any law, shall be exempt to the extent such capital gain is invested in the purchase of another land/building within a period of 2 years after the date of transfer
• Any LTCG shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of transfer in the specified long term asset
• Capital gain arising from the transfer of LTCA being listed securities or Unit of a mutual fund or the UTI shall be exempt to the extent such capital gain is invested in equity shares forming part of an eligible capital within a period of 6 months after the date of such transfer
• The Capital gain that arises to an individual/HUF from the transfer of any capital asset other than residential house property shall be exempt in full if the entire net sales consideration is invested in purchase of one residential house 1 year before or two years after the date of transfer.