54f

One assessee sold a property and  with that capital gains constructed a property and claimed exemption u/s 54F.  My doubt is, for claiming exemtpion u/s 54F, the construction starting date must be after the sale of property and not before for which aAssessee's Authorized Representative is  not accepting.  Please clarify

Replies (4)

it can be before the sale of property.  Enough case laws available on this issue.  Kindly do some research....

Agreed. Construction may commence even before transfer of capital asset. However, the construction should be completed within 3 years of transfer. Date of commencement of construction is irrelevant. You can refer to case law: CIT v. Bharti Mishra[2014]

Construction of another house property may start before the sale of the house property in question, but it should be completed within the specified time of claiming exemption u/s 54F. For your clarity, I am stating the law in a bit simplified form. For bare text, kindly refer https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

U/s 54F, any long term capital gains arising to any individual of HUF from sale of residential house property(whether self occupied or on rent), shall be exempt to the extent such capital gain is invested in:

  • Purchase of another Residential House property within one year before or two years after the due date of transfer of  the property sold and/or;
  • Construction of residential house property within a period of 3 years from the date of acquisition.

The New House Property must be held as capital asset for 3 years from the date of purchase or construction.

Relevant case laws- CIT vs Bharti Mishra, UOI vs Wood Papers Limited, G.P. Ceramics Pvt Ltd. vs CTT

FOR THE PURPOSE OF CLAIMING EXEMPTION U/S 54F, CONSTRUCTION OF NEW PROPERTY HAS TO BE COMPLETED WITHIN 3 YEARS FROM THE DATE OF SALE. THERE IS NO CONDITION THAT CONSTRUCTION SHOULD ALSO BE STARTED AFTER SALE. IT CAN START BEFORE THE SALE AS WELL.

FURTHER IF YOU HAVE SOLD A HOUSE PROPERTY AND INVEST THE GAINS IN CONSTRUCTION OF NEW PROPERTY THEN WHY HAVEN'T YOU CLAIMED EXEMPTION U/S 54 INSTEAD OF 54F ?

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
14 November 2026
Manager - Indirect Tax (GST)

Westbridge Consulting LLP

New Delhi

CA

View Details
Company
ARTICLESHIP 25 October 2026
Article Intern (CA Articleship)

Arpan Bohra & Co

Hyderabad

CA Inter

View Details
Company
ARTICLESHIP 07 November 2026
Article Assisstant

DPV & Associates

Chennai

CA Inter

View Details
Company
21 October 2026
CA INTER/ BCOM WITH EXPERIENCE

CA S KUMAR GUPTA & CO

Amritsar

CA Inter

View Details
Company
30 October 2026
Asst Manager Accounts

Goodwin Pumps India Pvt Ltd

Chengalpattu

CA Inter

View Details
Company
19 October 2026
Accountants/Articles (Freshers/Experienced)

ADY & CO.

New Delhi

Graduate (Any)

View Details
Company
28 October 2026
Assistant Director/ Associate Director-Finance & Accounting

Krea University

Chennai

CA

View Details
Company
ARTICLESHIP 14 November 2026
Articleship Assistant

B Thejas and Associates

Bengaluru

CA Foundation

View Details