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CS Executive · Setting Up of Business, Industrial and Labour Laws · Startups and its Registration

Rohan invests Rs 50 lakh from sale of a residential house in the equity shares of an eligible startup company, as per the long-term capital gains relief. Which condition must the investor satisfy to claim exemption on long-term capital gains?

The relief applies to an individual or HUF who earns long-term capital gains from a residential property and invests them in shares of an eligible startup company, which must then use the money to acquire notified assets within the prescribed period. Companies and short holding periods do not qualify.

  1. AThe investor must be an individual or HUF who sells a residential property and invests the gains in the eligible startup, which must use the funds for notified assets within the prescribed periodCorrect
  2. BThe investor must be a company selling any listed shares
  3. CThe investor must invest in a listed startup only
  4. DThe investor must hold the shares for less than 12 months

Explanation

The relief is for an individual or HUF who transfers a long-term residential property and subscribes to shares of an eligible company, which must use the amount to buy new assets within the prescribed period. Companies are not covered, so option B is wrong. Holding rules are the opposite of option D, and no listing is required.

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