Capital gains u/s 54 and 54 F

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This discussion clarifies the application of Capital Gains Tax exemptions under sections 54 and 54F. It explores scenarios where an individual sells an old flat and equity shares, then invests the proceeds into a new flat. The advice suggests that exemptions can be claimed under both sections if the property is sold first, followed by the shares, and the new flat is purchased within the stipulated timeframes. There's also a query regarding the tax rate applied if a previous exemption is added back due to purchasing another flat within three years.

narayan

narayan (Querist)
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26 August 2024 I have two flats now.

Old One purchased in 2004

and one purchased in aug 2023 against sale of equity ( section 54 f benefit claimed) in fy 23-24.

If I sell my old 2004 flat for 2 cr and sell some equity ( long term) rs 80 lacs this FY 24-25, can I claim full cap. Gain tax exemption if I invest the proceeds in a new flat costing 2.80 cr.????

In such a case the LTCG u/s 54 F claimed last year will be added back this FY 24-25 at the new tax rate of 12.5 % ????

At any point of time i will have only two flats

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2024 1. You can claim exemption under both these sections, provided you sell flat first, then the shares to invest in purchase of third flat.
2. If you purchase the flat after the period of two year from the sale of the shares sold in 2023-24, no liability of adding back the exemption claimed in 2023-24.

narayan

narayan (Querist)
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26 August 2024 Thank you sir
Section 54 f (2) says exemption will be withdrawn if I buy another flat within 3 years. Is it true

Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2024 It is two years for purchase of the new flat. Three years is for construction.

narayan

narayan (Querist)
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26 August 2024 Thank you
That means if I buy this new flat by selling my 2004 flat and shares , then the previous exemption claimed will be added back as capital gains in current year AT WHAT RATE????
Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 August 2024 Though the clarification is awaited, but it should be at 12.5% rate.

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