Capital gain exemption under 54F for construction of flat by the builder

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Lakshmi Karakondu (Querist)
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06 June 2025 I've sold the ancestral property(agri land) during April 2023 and opened the capital gain account in June 2023 with nationalized bank for the sold amount .During December 2022 I've entered into sale agreement with one Builder(Gated community) to purchase residential flat, which complete the construction and handover the flat as per RERA and I am releasing the funds to builder from capital gain funds by submitting form C and form D to bank according to phase wise construction. I have claimed the income tax under 54F for the financial year 2023-24.Now in June 2025 I want go for flat registration. As I am going for flat registration after 2 years of property sale,is it eligible under 54F claim? and Sale agreement with builder does come under construction clause of 54F? My understanding is we can claim under 54F if we purchase the residential house within 2 years or construct the house within 3 years. Please guide.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 June 2025 Yes, sale agreement within 2 years come under construction clause of 54F.
You are eligible for 54F claim irrespective of registration after 2 years.

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Lakshmi Karakondu

Lakshmi Karakondu (Querist)
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09 June 2025 Thank you very much for the response. But I forgot to add that still there is some amount in my capital gain account which i want to release towards flat then go for registration. The bank not willing to release the balance amount saying it crossed 2 years for purchase of flat but my argument is that it is not just purchase of flat, it comes under construction as we are releasing the funds to the builder and the project is under construction. Please deliver your opinion and guide.
And also please let me know when I can approach Income tax AO for closure of CG account? Do I need to withdraw full amount from CG account or keep interest amount before requesting AO? Please guide. Thank You.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 June 2025 Withdraw full amount bank can't question.
No need to approach AO.

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Lakshmi Karakondu

Lakshmi Karakondu (Querist)
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09 June 2025 Thank you sir. That helps me.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 June 2025 You are welcome...
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