The Income Tax Act, of 1961 is the main statute of Income Tax in India. It provides for levy, administration, collection, and recovery of Income Tax.

Section 54EE talks about the long-term capital gain exempted when invested in long-term assets. One can claim this exemption by following a few conditions.

There is no exemption on the transfer of a short-term asset. It is available for the transfer of a long-term asset.
The beneficiary has to invest the whole or part of the Capital gain in the long-term asset.
Within six months from the initial transfer date, the investment should be made.
The investment during a specified financial year should not be more than Rs. 50 lakhs.

Following assets are not considered capital assets anymore.-

Movable property for personal use
Agricultural land/property in a rural area
Gold deposit bond under a gold deposit scheme
Special bearer Bonds
6.5% or 7% gold bond or national defense gold bonds issued by the Central Government of India

What is the lock-up period under section 54EE?

In order to gain benefits under section 54EE, it is important to invest in the ‘long-term specified asset’. The lock-in period is for three years. In this period, you cannot convert or transfer the long-term specified asset for three years. Suppose you transfer or convert the specified long-term asset before the completion of this period, your claim under section 54EE will be considered to be income chargeable under the ‘Capital Gain’ in the previous year in which the transfer/conversion was carried out.

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NGO

COMPLIANCES

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Section 54EE- Capital Gain Not To Be Charged On Investment In Units Of A Specified Fund

Alka Pranjal

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