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Capital Gain, Income Tax

Issue Id: - 118329
Dated: 16-1-2023
By:- Ethirajan Parthasarathy
Capital Gain

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A resident of India, holds shares in a foreign company. He wishes to sell the such shares and re-invest the sale proceeds in a residential property (his first property) in India and claim exemption u/s 54F.

My opinion is, it is possible. Can experts’ comment on my view.

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1 Dated: 16-1-2023
By:- PRIYACHARAN SR

"My Opinion"

In your context, to determine the eligibility, we need to verify the definition of long term capital asset as per Section 54 F "Capital gain on transfer of certain. capital assets not to be charged in case of investment in residential house".

Section 54F defines long term capital asset as "Where, in the case of an assessee being an individual, the capital gain arises from the transfer of any long-term capital asset, not being a residential house". Since the bare act uses the phrase any long -term asset, not being a residential house, Shares held in foreign company is an eligible long term capital asset to claim deduction u/s 54F (assuming the holding period criteria is satisfied in your scenario).

Hence you may invest the sale proceeds in residential house property and shield your capital gain arising under section 54F.


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