Sec 54 exemption

If the agreement was registered in Oct 2024, then legally not possible..

thank you for your reply , even if we treat it under construction category. any way out of this .

The key question here is whether the Oct 2024 booking of the under-construction flat counts as the date of purchase for Section 54.

Section 54 allows exemption if you purchase a new house within 1 year BEFORE or 2 years AFTER the date of transfer (sale). For construction, the window is 3 years after the sale.

Your timeline:

- Sale date: Feb 2026

- 1-year window before sale: Feb 2025

- Flat booked: Oct 2024 (16 months before sale, outside the 1-year window)

- Possession: Dec 2026 (10 months after sale, within 2 years after)

Two points on this:

1. ITAT and High Court decisions have consistently held that for under-construction property, the date of purchase is the date of the agreement or allotment letter, not the possession date. On that reading, Oct 2024 falls outside the 1-year window.

2. However, some courts have taken a practical view that for under-construction property, the effective purchase is complete only on possession. Dec 2026 possession falls within 2 years of the Feb 2026 sale , well within Section 54.

To protect yourself: deposit the LTCG amount in a Capital Gains Account Scheme (CGAS) before filing your ITR for AY 2026-27 (by July 31, 2026). This preserves your exemption claim even if possession is pending. You can draw on it for the Dec 2026 possession payment.

For the indexation and LTCG computation, this [property capital gains tax guide for AY 2026-27](https://taxgarden.in/blog/tax-on-sale-of-property-india-capital-gains-seller-guide-ay-2026-27) has the Section 54 conditions and the CGAS process in detail.

Thank you Sir for your guidance - One point , I had taken a home loan for this flat to fund the purchase (based on builders demand letters) and almost 95% of the payment has been done to builder. When we sold the old property amount received was used to pay back this loan . so practically , we are left with no funds from the old house sale as the price of new flat is higher than the sale price of old house by 10%-15%. Capital gains on the sale was to the tune of 118 Lacs. any way out pls...

You can claim the exemption u/s. 54 for all the payments made from Jan 2026 till the date of possession, provided the balance payable amount is parked in CGAS account.

Thank you sir for your guidance , will it also cover payments made to Home loan company ( as payment towards the flat cost - only the principle component). Secondly , balance payment is only 6-7 lacs so do we deposit this in CGAS account before July 31st. Please clarify .

Yes, if the old property was sold within one year from the loan taken.