Section 54 F Capital Gain Tax Exemption

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Ajay Hans (Querist)
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21 July 2008 I have a house property and invested in new house which is under construction by a reputed builder with an estimated period of construction 36 months. Agreement to sale is signed by the builder. As per section 54 F, I need to invest within 3 years of property sold to get Long term capital gain exemption.

What will happen if constrcution is delayed and physical possession is given after 36 months of sale of my previous property. Will I be eligible to Capital Gain Tax exemption.

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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21 July 2008 It seems that u have entered into agreement for purchase of a builup house from the builder constructing the same. In my opinion u will be elegible to claim exemption if the same is ready for possession in two years. In case of failure to do so no exemption will be available and the income shall be subjected to tax on the expiry of two years.

Ajay Hans

Ajay Hans (Querist)
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21 July 2008 I have an agreement which says possession within 30 months (27 floors building), which entitles me for the exemption in line with section 54F and all consideration received from previous property is paid to builder within 1st year.

For some reason if the posession by the builder is delayed by more than 6 months from original 30 months duration then in this case it will exceed 36 months and I will loose the exemption.

Is there any court case or ruling granting exeption to such case

Ajay Hans

Ajay Hans (Querist)
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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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02 April 2012 For claiming exemption u/s 54F, the amount has to be invested in a residential house property.

However, if the amount is not invested by the due date of filing the return, the amount has to be deposited in a capital gain scheme by the due date of filing the return.

Assuming you have deposited the amount in the Capital Gain Account but the amount could not be invested in the residential property within the time provided in Section 54F, the amount shall be taxable in the year in which the period expires.

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Section 54 F Capital Gain Tax Exemption

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