EXEMPTION OF LONG TERM GAIN UNDER SECTION 54F

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A client received two flats in exchange for a development plot. While the occupancy certificate was received in September 2024, this wasn't initially reported in the 2024-25 tax return. One flat was sold in the 2025-26 financial year, with the other retained. The advice is to revise the 2024-25 ITR to report the capital gains from the plot and claim Section 54F exemption for the retained flat. The sale of the second flat in 2025-26 should be treated as a Short-Term Capital Gain, using the Stamp Duty Value from the occupancy certificate date as the acquisition cost.

eddanapudi murali

eddanapudi murali

(Querist)

21 August 2026 Sir, One of my clients, have given a plot for development on 12-10-2021 and he got two flats allotted to him against the plot given for development. The 2 flats alloted to him got occupancy certificate from municipality on 30-9-2024. He had forgotten to tell the information while filing his ITR for 2024-25 FY. In 2025-26 FY he has sold one flat and one is kept for him self. As on the date of getting occupancy certificate he has one house only. Can he claim the exemption under section 54F on one flat and offer LTCG on the sold flat in ITR for 2025-26 FY or He has to revise his ITR already filed 2024-25 FY , by claiming exemption on one flat kept for him under Sec.54F and pay tax on LTCG on sold flat . Please kindly give your expert advice to the above questions.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

21 August 2026 FY 2024-25 Action: Revise the ITR for FY 2024-25 (AY 2025-26). Report LTCG on land under Sec 45(5A), claim Sec 54F exemption for the one retained flat, and pay tax on the balance LTCG.

FY 2025-26 Action: Report the sale of the second flat in ITR for FY 2025-26 (AY 2026-27) as Short-Term Capital Gain (STCG), using its SDV as on 30-09-2024 as the cost of acquisition.

eddanapudi murali

eddanapudi murali

(Querist)

21 August 2026 Thank you Ashok kumar sharma ji

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