In Budget 2012 new Section 54GB is proposed to be inserted to provide exemption from long term capital gain on sale of residential house by Individual or HUF if the net consideration received is invested in equity shares of eligible company.

The details of the section 54GB in plain terms is given as under:

Exemption is provided from

  • Long Term Capital Gain from
  • Sale of Residential House to
  • Individual or HUF

If, the assessee has invested

  • before the due date for filing of return
  • net consideration received in
  • equity shares of eligible company

and, the company has

  • within one year of subscription
  • utilised the amount for purchase of new assessee

the amount of net consideration in proportion to the amount invested shall be exempt from capital gain.

If the equity shares are sold or transferred by the assessee the amount of capital gain shall again be taxed.

So, all in all if the assessee invests proceeds of sale of residential house in a company which utilises it for purchase of new asset then the same shall be allowed as deduction from capital gain.