CA. Bhavik P. Chudasama
Quick Summary
Introduction Section 54F of the Income Tax Act, 1961 provides an exemption from long-term capital gains (LTCG) on transfer of capital assets (other than residential house property) if the assessee invests the net consideration in the purchase or construction of a residential house within prescribed
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FAQ :
Section 54F provides an exemption from long-term capital gains tax when the net consideration from selling a capital asset (other than a house) is reinvested in a new residential house within specified timeframes.
Yes, joint ownership is considered ownership. You must not own more than one residential house (other than the new one being purchased for the exemption) on the date of transfer to qualify for the Section 54F exemption.
An under-construction flat is considered a constructed residential house for Section 54F purposes if you receive possession within three years after the date of the capital gains event. Booking or allotment alone before the transfer date does not cause disqualification.
No, receiving possession of even one additional residential flat (other than the new asset purchased for exemption) within three years of the transfer date will lead to disqualification of the Section 54F exemption.
If you violate the conditions of Section 54F (e.g., by acquiring another residential house within the prohibited period), the exemption previously allowed becomes taxable in the financial year the condition is violated.
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