Section 54D of the Income Tax Act<\/a> offers tax<\/a> exemption on capital gain<\/a>s from compulsory acquisition of land or building used for industrial purposes. The exemption applies if the proceeds are reinvested. Indian industrial landowners use Section 54D when their property is acquired by the government.<\/p>\n This guide explains how Section 54D works.<\/p>\n Section 54D allows:<\/p>\n The aim is to support businesses facing acquisition.<\/p>\n Eligibility:<\/p>\n Companies, firms, and individuals running industries can claim.<\/p>\n Key conditions:<\/p>\n Strict compliance required.<\/p>\n The exempt amount is the lower of:<\/p>\n If new asset costs less, only that amount is exempt.<\/p>\n Section 54D matters for three reasons:<\/p>\n A clean Section 54D claim protects business gains.<\/p>\n The process:<\/p>\n The process supports industrial recovery.<\/p>\n If reinvestment is delayed:<\/p>\n CGAS is the safety net.<\/p>\n Section 54D offers:<\/p>\n These benefits suit industrial businesses.<\/p>\n A common method:<\/p>\n Compliance is essential.<\/p>\n Keep these handy:<\/p>\n Maintain detailed records.<\/p>\n Filers often:<\/p>\n A clean check avoids these errors.<\/p>\n A few habits help:<\/p>\n Suppose your industrial land worth ₹2 crore is acquired by the government. You receive ₹2.5 crore as compensation. Capital gains are ₹50 lakh. You buy new industrial land for ₹60 lakh.<\/p>\n The full gain is tax-free.<\/p>\n Construction of new industrial building is also allowed under Section 54D. The construction must be completed within 3 years.<\/p>\n For agricultural land acquisition:<\/p>\n Different sections for different land types.<\/p>\n Section 54D applies to compulsory acquisition only. For voluntary sales, other sections like Section 54 or 54F apply.<\/p>\n NRIs can claim Section 54D if they have eligible industrial property in India. All other rules apply.<\/p>\n For under-construction industrial property:<\/p>\n Plan construction carefully.<\/p>\n To maximise:<\/p>\n A clean plan helps.<\/p>\n If you sell the new property within 3 years:<\/p>\nWhat Is Section 54D?<\/h2>\n
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Who Can Claim Section 54D?<\/h2>\n
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Conditions for Exemption<\/h2>\n
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Exemption Amount<\/h2>\n
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Why Section 54D Matters<\/h2>\n
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How Section 54D Works<\/h2>\n
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Capital Gains Account Scheme (CGAS)<\/h2>\n
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Benefits<\/h2>\n
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How to Claim Section 54D<\/h2>\n
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Documents Needed<\/h2>\n
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Common Mistakes<\/h2>\n
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Tips for Better Use<\/h2>\n
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Section 54D Example<\/h2>\n
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Section 54D and Construction<\/h2>\n
Section 54D and Section 10(37)<\/h2>\n
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Section 54D and Voluntary Sale<\/h2>\n
Section 54D and NRIs<\/h2>\n
Section 54D and Construction Industry<\/h2>\n
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Section 54D and Tax Planning<\/h2>\n
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Section 54D and Selling the New Property<\/h2>\n