Profit on sale of any Capital Asset
Profit on sale of any Capital Asset (Other than a residential house) is exempt from tax, if the investment is made on a Residential House, subject to the following(Sec. 54F):
1.The Assessee is an individual/HUF.
2.The Capital Gain is by sale of Long-Term Capital Asset (other than residential house).
3.The Assessee has purchased a new house one year before the sale of the Capital Asset or two years after the sale of the Capital Asset or constructs a house within 3 years or purchase a site & constructs a house thereon within 3 years from the date of sale of the Capital Asset.
4.The cost of the new house is not less than the entire sale value excluding cost of transfer of original Capital Asset sold. If only a part is invested, amount invested only will be exempt. The balance is taxable.
5.If the full amount of sale value is not utilized for the above purpose before the due date for filling of Returns u/s 139(1), it should be deposited in a Bank under Capital Gains Scheme 1988 A/c and from this account it should be utilized for construction or purpose of house.
6.On the date of sale of the original Capital Asset, the assesses
(a) Does not own more than one residential house other than new house.
(b) Does not purchase within 2 years, or construct within 3 years any other residential house from the date of purchase/construction of the new house.