Who Can Claim Exemption Under Section 54GA?

The exemption under section 54GA can be claimed by all assesses.

Conditions to Claim Exemption Under Section 54GA

The exemption can be claimed under the following conditions:

1. If the asset, such as a plant, machinery, land, or building, or any right in land or building of an industrial undertaking in an urban area, is being sold as part of shifting the business to a Special Economic Zone (SEZ).

2. The capital gain must be used for the following purposes:

• Buying a new plant or machinery
• buying or constructing a building,
• shifting the original asset and its establishment
• spending for purposes specified in a Central Government scheme for this purpose

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

Capital Gains Account Scheme Under Section 54GA

If the amount is not used before the due date of filing the income tax return (ITR), then such amount must be deposited in a capital gains account at a bank before the deadline of filing such ITR.

How Much Can You Exempt Under Section 54GA?

Taxpayers can claim an exemption on the lower of the following:

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

When Can Exemption Under Section 54GA Be Withdrawn?

• If the new asset or any rights in it are transferred within three years of its purchase or construction, the cost of the new asset will be reduced by the capital gain amount that was exempted earlier.
• If the amount deposited under the capital gains account scheme is not used within three years after the date of sale, such amount will be treated as a capital gain, and the same will be taxable.