Buying house by selling equity shares? Here’s how you can claim tax exemption for LTCG on stocks sold
equity mutual funds. Normally, they would have to pay capital gains tax on sale of these which would decrease their money in hand. However, there's a way to save long-term capital gains (LTCG) tax on the sale of equity shares and equity mutual funds.
Income tax laws allow individuals to save tax on LTCG from equity shares and equity mutual funds provided the capital gains are used to buy a residential property. Here's how.
Save LTCG tax on sale of equity by buying a house
Yogesh Kale, Executive Director, Nangia Andersen India, says, «Section 54F of the Income-tax Act, 1961, allows individuals and Hindu undivided families (HUFs) to save tax on LTCG arising from the sale of any capital assets other than a residential house property. The tax on LTCG can be saved by investing the long-term capital gains by purchasing or constructing a residential house within the prescribed time and subject to certain conditions.»
Section 54F allows tax savings on long-term capital gains from any capital asset other than a residential house. However, if the LTCG arises from the sale of a residential house, then tax exemption can be claimed under a different section of the Income-tax Act — Section 54. The rules to claim tax exemption under Section 54 are different from those under Section 54F.
Suresh Surana, a practising chartered accountant, says, «A capital asset under Section 54F includes any long -term capital asset (other than a residential house) that can have long-term capital gains on its transfer. These include equity
