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Whether Capital Gains exempt from tax u/s 54F for my case?

Indudhar (Tax Advocate) (427 Points)

11 April 2011

A client of mine owning a plot sold the same in 30-3-2009 and within 1 year purchased new plot he has not started constructing it till now. And also he is owning a residential property other than this property..He is willing to start construction right now in order to save tax .Can he claim exemption of capital gain u/s 54F? If yes than how will the ITO verify the same, as there is still another 1 year for construction time limit u/s 54F.

Please guide me..

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3 Replies

Poornima Y (CA) (94 Points)
Replied 11 April 2011

Exemption under section 54F is not available it the assessee owns more than one residential house, other than the new asset, on the date of transfer of the original asset.

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tejas shah (proprietor) (54 Points)
Replied 11 April 2011

Yes, you can claim the benefit u/s.54F. The basic condition for claiming deduction u/s.54F is that you have to construct a new house property within a period of 3 years from the date of sale of old property. You have to deposit the amounts with banks as fd under capital gain scheme.whenever you are using these amounts for construction of property within a period of three years i.e. from 30-03-09, you have to withdraw the same from the said fd kept under capital gain scheme. If you will not construct a property within a period of 3 years, then in that year, you have to pay capital gain tax.

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(Guest)

Originally posted by : tejas shah
	Yes, you can claim the benefit u/s.54F. The basic condition for claiming deduction u/s.54F is that you have to construct a new house property within a period of 3 years from the date of sale of old property. You have to deposit the amounts with banks as fd under capital gain scheme.whenever you are using these amounts for construction of property within a period of three years i.e. from 30-03-09, you have to withdraw the same from the said fd kept under capital gain scheme. If you will not construct a property within a period of 3 years, then in that year, you have to pay capital gain tax.