Condition to Claim Exemption Under Section 54G

The exemption under section 54G can only be claimed if:

1. The assets of the industrial undertaking are being transferred as part of the shifting of that industrial undertaking from an urban area to a non-urban area.

2. The gain amount is used in the following:

• Buying new plant or machinery
• Buying or constructing a new building
• Shifting the old assets and business setup
• Spending on things allowed under a scheme introduced by the central government.

3. The capital gain is used within one year before or three years after the date of transfer.

Who is Eligible to Claim Exemption Under Section 54G?

The exemption under section 54G can be claimed by any category of persons. Therefore, all assessees are eligible to claim the exemption under section 54G.

Capital Gain Account Scheme Under Section 54G

If the assessee has not utilised the capital gain amount on or before the deadline to file their Income Tax Return (ITR) for the prescribed purpose, then this amount can be deposited in a bank under the capital gain account scheme before the due date of filing the ITR.

Exemption Amount Under Section 54G

The assessee can claim the exemption for the lower of the following:

• The capital gain amount, or
• Aggregate of the amount invested in new assets, expenses on transfer or establishment, and the amount deposited in the capital gain account scheme.

When Exemption Claimed u/s 54G is Withdrawn?

The exemption claimed by the taxpayer can be withdrawn under the following conditions:

• When the new asset or any rights are transferred within three years of their purchase or construction. The amount of the new asset will be decreased by the amount of gain that was exempted earlier.
• When the amount deposited under the capital gain account scheme is not used within three years after the date of sale, the unused amount will be treated as capital gain for the relevant previous year, and the same will be taxable.