Exemption u/s 54F can be availed within a year before or two years after the date of transfer of shares (assuming these are held for long term) or within three years after the date of construction of a residential house in India.

I bought a flat and paid for it in full. The GST and stamp duty along with registration charges are yet to be calculated by the builder. Registration is not likely before the end of the financial year. I have sold some shares to finance the purchase. How can I claim capital gains exemption under Section 54F?

Amit Maheshwari, Partner, Ashok Maheshwary and Associates replies, "Exemption u/s 54F can be availed within a year before or two years after the date of transfer of shares (assuming these are held for long term i.e. one year if these are listed shares and 2 years if unlisted) or within three years after date of construction of a residential house in India. One crucial condition is you should not own more than one residential house at the time of sale of shares. Section 54F does not impose any conditions regarding registration of property. Unutilised capital gain, if any, should be deposited in the capital gain scheme till the due date of filing of tax return."

I bought a flat through a construction linked plan (CLP) in 2007. The sale deed was executed in November 2007 and possession given in May 2012. In those 5 years, I paid approximately Rs 21 lakh for the flat and Rs 2 lakh for registration. I became an NRI in January 2014. The flat has remained locked and I pay the society a monthly maintenance of Rs 3,500. The market value of the flat is Rs 25 lakh now. I want to sell the flat. The broker is ready with a buyer for Rs 25 lakh and his brokerage fee is Rs 25,000 + GST. All payments will be through DD or RTGS. How do I compute my capital gains or loss? I understand it will be on Rs 36 lakh which is the circle rate and not on Rs 25 lakh which is the sale price. Kindly advise.

Jayant R. Pai, CFP and Head - Products, PPFAS Mutual Fund replies, "There are two views regarding date of acquisition. One considers the date of the sale deed (In this case, November 2007), while the other considers the date of possession (May 2012). Taking 2012 is a more conservative approach, which may help obviate queries from the income tax department. In case we do so, the duly inflated cost will amount to: Rs 23,00,000 * 289 / 200 = Rs 33,23,500, wherein : ‘289’ is the value for the current financial year and ‘200’ represents that for 2012-13. As the Circle Value is higher than this, your LTCG will be Rs 2,76,500. The tax outgo will be 20% of this value (Rs 55,300). As you are an NRI, this gain should be deducted at source, by the purchaser. You could avoid this TDS by applying for a tax exemption certificate. You could also avoid the tax either by investing in a residential property under the provisions of Section 54 or by investing in bonds specified under Section 54EC. Consult your tax adviser for a more customised solution."