Okay we all know that capital gain exemption is available if the amount is reinvested in a house property subject to certain conditions. However, how many of us actually knew that this exemption was still available even if the the property acquired was located in a foreign country. This was because the law was silent on this point.

This fact was upheld by Mumbai Tax Tribunal in case of Prema P. Shah, wherein the tribunal held that  the assessee was entitled to the benefit of exemption from taxation under the Act which did not exclude the right of the assessee to claim the property purchased in a foreign country. The Tribunal held that if all other conditions laid down in the section were satisfied, merely because the property acquired was located in a foreign country, the exemption claimed would not be denied.”

Budget 2014 has now imposed limitations on claiming exemption from Capital Gain, the new law now says that,

“The provision is proposed to be amended to clarify that exemption u/s 54 and u/s 54F shall be available in case investment is made in “one residential house situated in India” within the prescribed time limits, emphasizing that the exemption is available with respect to one residential house and that too it must be located in India. Such a move was much necessitated in view of conflicting judgments rendered in this regard by various Tribunals. “

Thus, no more capital gain exemption for investment made in house property outside India  from FY 2014-15 ( AY 2015-16) .

July 31st is the due date to file income tax return , please click here to file now.