Holding period under section 54F

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When claiming a deduction under Section 54F of the Income Tax Act, 1961, for capital gains, the crucial holding period for your new residential property begins from the date you take possession. This means you must hold the property for at least three years from the possession date, not from when you made the payment, to be eligible for the tax benefit.

siddhesh verma

siddhesh verma (Querist)
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29 April 2023 For claiming deduction u/s 54F we have to invest amount in residential House and also hold such property for 3 year but my issue is 3 years is counted from which date from the date of payment or from the the date of possession of Flat.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 April 2023 Possession of flat..

CA Sanat Pyne

CA Sanat Pyne (Expert)
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30 April 2023 Under Section 54F of the Income Tax Act, 1961, taxpayers can claim a deduction on the capital gains arising from the transfer of a long-term capital asset (excluding a residential house) if the proceeds are invested in a residential house. However, to claim this deduction, certain conditions need to be fulfilled, including the holding period of the new residential house.

In the case of Section 54F, the holding period of the new residential house is calculated from the date of its possession. It is not counted from the date of payment. Therefore, you must hold the new residential property for a minimum period of three years from the date of possession to be eligible for the deduction under Section 54F.

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