Queries related to Section 54F and Capital Gain Account Scheme (CGAS) Account

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This discussion clarifies queries regarding Section 54F of the Income Tax Act and the Capital Gains Account Scheme (CGAS) for long-term capital gains tax exemption on equity shares. It confirms that Section 54F applies to residential properties, not just land, and can be used multiple times if specific conditions are met, including not owning more than one property at the time of eligibility. The advice also specifies that the entire sale consideration, not just the capital gain, should be transferred to CGAS, and details on claiming exemptions and handling unutilised amounts in ITR-2 are provided.

San Gai

San Gai (Querist)
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22 March 2025 I am looking for an option to get exemption on Long Term Capital Gain tax on Equity Shares. I came to know that one can transfer the amount to Capital Gain Account Scheme (CGAS) Account
if the return filing date is near. Then the amount needs to be withdrawn from the CGAS account within 2 year to buy a residential property or within 3 year to construct a house.

Queries:
1. Does section 54F applies to only residential property? Doesn't it apply to land? I mean is land buying considered as buying a property?
2. Can section 54F be used for buying maximum two residential properties in lifetime? In other words if one ensures that there is no or a single property before using 54F every year unlimited times?
3. Does one need to transfer only LTCG tax amount to CGAS account or whole LTCG amount prior to tax?
4. If one transfers LTCG to CGAS. How the ITR 2 needs to be filled? Does one still need to show LTCG details? In addition to this, in which section CGAS details need to be filled?
5. Section 54F allows one to buy a property or construct a house within 1 year. So if one wants to know use section 54F but not actually used, then is there option on ITR 2 to fill such information?

Dhirajlal Rambhia online

Dhirajlal Rambhia online

(Expert)
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22 March 2025 1. Residential house property; not just land.
2. Yes unlimited times provided you do not possess more than one HP at the time of its eligibility. Also satisfy other conditions of the sub-section.
3. For sec. 54F its the total sell consideration and not just LTCG.
4. Yes details are to be declare with the exemption to be claimed for purchase of an HP.
5. If the amount is not utilized in purchase or construction of an HP within specified time period, the LTCG tax liability will arise in the year of its withdrawal.

Dhirajlal Rambhia online

Dhirajlal Rambhia online

(Expert)
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30 September 2025 Good luck....

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