Exemption U/s 54F

This is with regard to exemption U/s 54F.

If substantial amount is paid to the huge apartment builder who promises to handover flat in 3 years,will it be considered as investment for construction of a house? and whether it will qualify for exemption U/s 54F

Please advice.

Replies (3)
Quick Summary
This discussion clarifies whether paying a substantial amount to a builder for an under-construction flat, with possession expected in three years, qualifies for exemption under Section 54F. It's confirmed that such an investment can be eligible for capital gains tax deduction, provided certain conditions are met. Crucially, the entire consideration must be reinvested, or funds transferred to a Capital Gains Accounts Scheme before the ITR filing due date. Case law suggests that even if possession isn't received, if substantial construction is complete within three years, it can be considered an investment for exemption purposes.

Yes it can be claimed as deduction under section 54f subject to certain conditions
To get 100% capital gain tax deduction you are required to invest as per 54F conditions the entire consideration.

But till the time you re-invest, you have transfer funds to a seperate Captial Gains Accounts Scheme with approved bank on or before due date of filing ITR.
There are many case laws and high court judgements on this matter (you may google it) where it has been held that Even if you've not received the possession and Substantial construction work has been completed within 3 years (e.g. say plastering, coloring, furniture etc. is pending) you're said to have invested your capital gains in construction work and you can avail 3years deadline and you're eligible for exemption u/s 54 or 54F on fulfillment of other conditions of the said sections..

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