Can I claim Section 54 benefit after moving to UK?

  • There is no bar on non-residents to claim capital gains tax exemption benefit as per section 54F. Resident and non-residents taxpayers both are equally eligible.

Harshal Bhuta
First Published24 Jun 2024, 07:39 PM IST
For FY24, capital gains derived from sale of unlisted company shares is liable to tax at 10% (plus applicable surcharge and cess) without indexation benefit.
For FY24, capital gains derived from sale of unlisted company shares is liable to tax at 10% (plus applicable surcharge and cess) without indexation benefit.

I am currently employed with an MNC. I relocated to the UK from Bengaluru in August 2023. In April 2023, I exited my investment in a startup in 2010, and used the proceeds to buy a house to claim tax benefits. Am I still eligible for this tax exemption, or will I lose the benefit since I have moved to the UK?

—Name withheld on request 

From your query, I assume that you had made investment in equity shares of an unlisted company which you sold in April 2023. Notwithstanding the determination of whether TDS provisions would have been applicable upon sale of equity shares of the company, capital gains derived from the sale would have been taxable at 20% (plus applicable surcharge and cess) along with indexation benefit.

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Since you left India last August for employment in UK, you would be treated as a non-resident under Indian tax laws. Therefore, for 2023-24, capital gains derived from sale of unlisted company shares would be liable to tax at 10% (plus applicable surcharge and cess) without indexation benefit.

I assume you had invested in a residential house with the intention to claim exemption from capital gains tax on sale as per section 54F, and you were able to satisfy the applicable conditions such as investment up to net consideration amount, not owning more than one house property at the time of sale, etc. There is no bar on non-residents to claim capital gains tax exemption benefit as per section 54F. Resident and non-residents taxpayers both are equally eligible.

Besides, irrespective of the differential tax rates between a resident and a non-resident for capital gains derived from the sale of unlisted shares, there is no need to pay any tax (by way of advance or self-assessment tax) in India since you would be claiming tax exemption as per section 54F.

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You may also obtain professional advice whether to opt for the present remittance-based taxation in the UK so that capital gains tax exemption benefit in India does not effectively get nullified because of tax payment obligations in the UK on the capital gains derived from such sale.

Harshal Bhuta is a partner at chartered accountancy firm P.R. Bhuta and Co.

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First Published:24 Jun 2024, 07:39 PM IST
HomeMoneyPersonal FinanceCan I claim Section 54 benefit after moving to UK?

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