Income Tax exemption under Section 54 to Section 54GB: The time to invest in a residential house for tax deduction has been further extended for more than three months.
Income Tax exemption under Section 54 to Section 54GB: In view of the difficulties faced by taxpayers due to the second wave of the Covid-19 pandemic across the country, the Central Government has extended the timeline for claiming a tax deduction on the investment made in a residential house till September 30. The time to invest in a residential house for tax deduction has been further extended for more than three months. The investment required to be made on or after April 1 can now be made till September 30.
“The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between 1st April, 2021 to 29th September 2021 (both days inclusive), may be completed on or before 30th September 2021,” the Ministry of Finance said in an official statement on Friday (June 25, 2021).
Section 54 and section 54GB of the Income Tax Act 1962 provide for exemption from long term capital gains in case of an individual or HUF available on reinvestment of capital gains and reinvestment of sales proceeds respectively.
As per Section 54 of the IncomeTax Act, you can avail tax exemptions from Capital Gains on selling a residential property if you re-invest it for purchase or construction of a residential property. Under section 54GB of the Income Tax Act, the exemption is provided from capital gain arising out of the transfer of a residential property if you invest the amount for subscribing to the equity shares of the eligible company.
The Union Budget 2019 had extended the applicability of capital gain exemption under Section 54. It allowed the purchase or construction of two residential houses if the the gain is less than Rs 2 crore. A taxpayer can exercise this option only once. Earlier, previously one purchase or construction was allowed.
The Central Government has also extended several other timelines, including PAN-Aadhaar linking.