no, you have to buy a residential property 

agreed with sunny.......

Hi Shobhit,

If you go through section 54, it clearly says that the assessee should purchase or construct a residential house within a stipulated time frame. So exemption wil not be available u/s 54 if the assessee purchases plot of land. 

But, if the assessee constructs a residential  house on that land then he can claim exemption even for the cost of plot of land.

thanx...  i got it. i am clear now !!

SUNIL GARG says is very correct.

Dear Shobhit, Sunil Garg is absolutely right.

Land appurtenant to building is considered as part of the land only.

So you can very much buy land and build a house, the cost of land will be treated as investment in a residential house only.

Where the assessee proposes to construct or acquire a residential house, the consideration paid towards the cost of land in which the super-structure is or would be situated, is also eligible for deduction u/s.54. (Circular No. 667 dated 18-10-1993).

Tax authorities must determine extent of appurtenant land - The expression ‘land appurtenant thereto’ under section 54 has also a secondary meaning as equivalent to ‘usually enjoyed or occupied with’. There is no indication that the Legislature used the above expression in section 54 limiting its sense and meaning artificially to any particular extent.

The expression is used in section 54 in a wider sense. It is, therefore, imperative that the tax authorities will have to determine the extent of land appurtenant to a building transferred, taking into consideration a variety of circumstances that may be relevant for the purpose. It is not possible to lay down infallible tests to be applied for the determination of the extent of land appurtenant to a building, as the tests vary depending upon the facts and attendant circumstances of each case -CIT v. Zaibunnisa Begum [1985] 151 ITR 320 (AP).

the exemption amt includes the cost of land. but the new/ old residential house proporty should be constructed/ purchased with in the time limit to avail the exemption

Dear Shobit

You can buy a plot of land and create a structure on that plot. It will become building and land appertanent thereto. It may not necessarily a proper residential accomodation but even a small one can do.

You can also refer to Circular No. 667 dated 18.10.1993, which clearly says, cost of land is an integral part of residential house purchased or constructed.

But you have to construct some structure over that plot to be eligible for the exemption.

no its nly 4 residential property