Capital Gains not be charged on Investment in units of a Specified Funds – Section 54EE

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Section 54EE:- Capital Gains not be charged on Investment in units of a Specified Funds (Inserted by FA, 2016, w.e.f. 1-4-2017)

As per this section, any long term capital gain, arising to any assessee arising from transfer of any capital asset on or after 1-4-2016 shall be exempt to the extent such capital gain is invested within a period of 6 months after the date of such transfer in the long term specified asset provided such specified asset is not transferred within a period of 3 years from the date of its acquisition.

Provided that the investment made on or after 1-4-2016 in long term specified asset  by the assessee during any FY cannot exceed rupees 50 Lakhs

Further, provided that, the investment made by the asessee in the long term specified asset, out of the capital gains arising from transfer of one or more original asset, during the FY in which the original asset are transferred and in the subsequent FY does not exceed 50,00,000 rupees.

Quantum of Deduction:- Capital gain shall be exempt to the extent it is invested in the long term specified assets within a period of 6 months from the date of such transfer.

Consequences if the long-term specified asset is transferred within 3 years [Section 54EE(2)]:-

Where the long term specified asset is transferred by the assessee at any time within a period of three years from the date of its acquisition, the amount of capital gains exempt u/s 54EE earlier, shall be deemed to be long-term cap[ital gains of the previous year in which the long term specified asset is transferred.

If the assessee takes any loan or advance on the security of such long term specified asset, he shall be deemed to have transferred such long term specified asset on the date on which such loan or advance is taken

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