Revocation of capital gain exemption and sale of under construction flat
This query is : Resolved
Quick Summary
17 March 2025
Dear Sir / Madam,
My query is as follows:
Mr. X sold his house on 05/03/2024, generating a capital gain of ₹20 lakhs. He then invested ₹40 lakhs in an under-construction residential flat (Flat A) in March 2024, claiming a capital gain exemption.
As of today, the new property is still under construction. He is now interested in another residential project (Project B) and plans to sell his under-construction Flat A.
1) What will be the tax implications in the case of the sale of an under-construction flat A?
2) Will his previous capital gain exemption of Rs. 20 lakhs be revoked? Will that be treated as income for FY 2024-25, chargeable to tax at the slab rate?
3) Will this flat in the new project B be eligible for a claiming period of three years for under-construction property?
Please guide.
Thanks & Regards,
Suraj
My query is as follows:
Mr. X sold his house on 05/03/2024, generating a capital gain of ₹20 lakhs. He then invested ₹40 lakhs in an under-construction residential flat (Flat A) in March 2024, claiming a capital gain exemption.
As of today, the new property is still under construction. He is now interested in another residential project (Project B) and plans to sell his under-construction Flat A.
1) What will be the tax implications in the case of the sale of an under-construction flat A?
2) Will his previous capital gain exemption of Rs. 20 lakhs be revoked? Will that be treated as income for FY 2024-25, chargeable to tax at the slab rate?
3) Will this flat in the new project B be eligible for a claiming period of three years for under-construction property?
Please guide.
Thanks & Regards,
Suraj
Dhirajlal Rambhia
(Expert)
22 March 2025
As the new flat in project B is eligible for capital gains exemption if possession available within three years from sell of original flat on 05/03/2024, no need to reverse & reclaim exemption again in new ITR as practically it is not feasible.
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Dhirajlal Rambhia
(Expert)
22 March 2025
You are welcome.
Dhirajlal Rambhia
(Expert)
04 October 2025
Good luck...
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