Save Lakhs: Use Section 54F for Gold/Land.

• Section 54F allows tax relief on capital gains from selling non-residential assets.
• Reinvest gains in a new house within specific timeframes to claim exemption.
• Individuals/HUFs can benefit; restrictions apply to owning other properties.

For many Indians, buying property is often made possible only by selling their current, long-standing assets. Letting go of an asset can be by choice or due

to fund constraints. Either way, selling assets like gold, land, commercial property, or even stocks can attract a hefty tax, even if they have been held for many years. This is where Section 54F of the Income Tax Act, 1961 comes into play. Section 54F of the Income Tax Act allows taxpayers to save tax on long-term capital gains (LTCG) by reinvesting the money to buy a property. LTCG is charged at a uniform rate of 12.5 per cent for most asset classes on sales made on or after July 24, 2024. Even though it is a simple provision, there are several nuances to it that must be kept in mind to avail its benefits. What is Section 54F of the Income Tax Act? Introduced to encourage home ownership, “Section 54F of the Income-tax Act, 1961 is a beneficial exemption provision which permits an individual or a Hindu Undivided Family to claim relief from long-term capital gains tax arising on the transfer of any long-term capital asset other than a residential house,” Tushar Kumar, advocate at the Supreme Court of India, told Mint. In simpler terms, Section 54F allows you to save tax on long-term capital gains if you sell something other than a house (gold, land, or shares) and buy or build a house. Who can take its benefits? Individuals and Hindu United Families (HUF—a family unit consisting of people that are related either by birth or marriage, who earn and own property together) Important rules

1. The long-term asset should not be a residential property.
2. Only one house must be bought or built with the sold-off assets’ money. If you’re buying, buy within 1 year ‘before’ or 2 years ‘after’ the sale. If you’re building, build within 3 years after the sale.
3. You should not own more than 1 house (excluding the new one) on the date of selling the assets.
4. Other than the house for which the exemption is claimed, you must not buy another residential house within 2 years, or build another house within 3 years.
5. If you use all the money from the sale to buy a house, no tax would be levied; if you use part of the sale money to buy a house, the tax is reduced proportionately.
6. Remember, in case you do not buy a house before filing your return, deposit the sale money in a Capital Gains Account to keep the exemption.

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