Section 54 GB :- Capital Gain on trfr of Residential property not to be charged in certain cases

Section 54 GB was introduced by the financial act 2012. It applies to an Individual and HUF which includes resident as well as Non- resident. 

1. Only long term capital Gain is considered. As this section applies to Resident as well as Non-Resident, hence the capital asset include the property in India as well as outside India.

    

2. For claiming the deduction, the assesee must  subscribe the Equity shares of an eligible company before due date of furnishing of return e.g. 31 July or 30 Sep as the case may be.  

    

3. And such eligible company must utilise the subscribed equity shares amount for purchasing of new asset within a year from subscription. for example if assessee has subscribed shares on 29May2013, then the company must utilise this amount before 29May 2014.

   
   

4. If Net consideration is less than cost of new asset then whole amount of LTCG would be exempt otherwise the proportional deduction will be allowed

           Long term capital gain * (Cost of new asset/ Net consideration )  would be exempt. 

 

   5. equity shares and New asset would be lock in period of 5 years. 

 

   6. The proportion of capital gain which was not utilised would be taxable.  

 

Eligible company :- 

1. The company which was incorporated in the previous year in which the capital gain arises.  suppose if capital gain arises on 30 Apr 2013. then previous year would be 1-4-2013 to 31-3-2014, means any company which is established in this above time period would be eligible for deduction.

2. The company should be engaged in the manufacture of an article or a thing. 

3. The assessee must have more than 50%  of share capital or voting rights after subscription as the case may be. 

4.The company should come under the purview of Micro, small and Medium Enterprise Act 2006.