NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains
Mr. Sanjay Iyer sold listed equity shares for a net consideration of ₹50 lakh, with a long-term capital gain of ₹30 lakh. Within the permitted period he bought a residential house for ₹40 lakh. Assuming he meets all conditions of Section 54F (including not owning more than one other residential house), what long-term capital gain remains taxable?
₹6 lakh remains taxable. Section 54F gives a proportionate exemption when net consideration is not fully invested: 30 lakh gain times 40 lakh invested over 50 lakh consideration is 24 lakh exempt. The remaining 6 lakh is taxable.
- A₹6 lakhCorrect
- B₹10 lakh
- C₹0
- D₹24 lakh
Explanation
Under Section 54F, if the whole net consideration is not invested, the exemption is proportionate: gain × amount invested ÷ net consideration = 30 × 40 ÷ 50 = ₹24 lakh. Taxable gain is 30 − 24 = ₹6 lakh. ₹10 lakh is the uninvested consideration, and ₹0 would need full investment.
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