NEW DELHI: The Union Budget for 2021-22 has proposed extending the time allowed for for investing in eligible startups to save capital gains tax arising out of the sale of residential property.
Under Section 54GB, a person can get exemption from paying capital gains tax in case he or she invests the gains arising out of selling a residential property to buy equity shares of a start-up.
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The existing deadline for such investments was March 2021, which the Budget has proposed to extend till March 2022
“The exemption under Section 54GB is allowed to an Individual and HUF from the long-term capital gains arising from the transfer of a residential house property. The exemption is allowed if the net consideration received or accruing in relation to the transfer of residential house property is utilised for subscription in the equity shares of an eligible start-up. However, the exemption is allowed only when the original asset (residential house property) is transferred up to 31-03-2021,” said Tarun Kumar, a Delhi-based chartered accountant.
The eligible startup is required to utilise this amount for purchase of new asset within a year from the date of subscription in equity shares by the assessee.