Capital gain exemption

As per sec.54, exemption from tax on capital gain will be allowed if the taxpayer has purchased house property one year before transfer or purchased within 2 years after transfer OR constructed house property within 3 years from the date of transfer of the property OR deposited the amount in Capital Gain Deposit A/c Scheme (CGDS) within due date of filing of return u/s 139(1).

If amount invested > Capital Gain Tax, then whole of the capital gain tax will be exempt.

Whereas invested < Capital Gain Tax, then exemption will be equal to amount invested.

While the same investment criteria mentioned u/s 54 is applicable to u/s 54F, but the exemption criteria is as follows:

If amount invested > Capital Gain Tax, then whole of the capital gain tax will be exempt.

Whereas invested < Capital Gain Tax, then exemption will be on proportionate basis.

So after going through the above provision we can reach at the conclusion that if you have made excess investment then in such case you will be eligible for exemption of full amount of taxation.

Hence the excess amount invested can't be carried forward.