NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Capital Gains
Vikram, a resident individual, sold listed equity shares held for three years, with STT paid. The net sale consideration was Rs 60 lakh and the long-term capital gain was Rs 30 lakh. Within the permitted period he bought a residential house for Rs 45 lakh. He owned no other residential house on the date of transfer, and the other conditions of Section 54F are met. Ignoring the basic exemption on equity LTCG, what portion of the gain remains chargeable as LTCG after the 54F exemption?
Rs 7.5 lakh stays chargeable. Section 54F gives a proportionate exemption when the net consideration is only partly invested: Rs 30 lakh x 45/60 equals Rs 22.5 lakh exempt. Deducting this from the Rs 30 lakh gain leaves Rs 7.5 lakh taxable.
- ARs 22.5 lakh
- BRs 15 lakh
- CNil
- DRs 7.5 lakhCorrect
Explanation
Where only part of the net consideration is invested, the exemption is gain x amount invested / net consideration = 30 x 45/60 = Rs 22.5 lakh. The chargeable LTCG is 30 - 22.5 = Rs 7.5 lakh. Rs 15 lakh is the uninvested consideration (60-45), not the gain, and nil would need the full net consideration invested.
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