Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
Open DEMAT Account with in 24 Hrs and start investing now!
Top Headlines »
Open DEMAT Account in 24 hrs
 Income Tax Return: What are the alternatives to Form 16 that can be used while filing ITR?
 What should you do if your Form 16 data doesn't match your ITR prefilled form?
 Check your Form 26AS, AIS carefully for error-free income tax return filing
 10 ITR filing mistakes which can cost taxpayers dearly
 Income Tax Return (ITR) Filing Deadlines FY 2023-24: A Quick Guide for Different Taxpayers
 ITR Filing FY24: 6 key points taxpayers must know as July 31 deadline looms large
 Tax Savings: How working women can save tax and get good returns | Check best options
 Income tax department notifies cost inflation index for current fiscal
 I-T dept notifies cost inflation index for FY25 to compute capital gains
 CBDT extends due date for filing Form 10A/10AB for charitable and religious trusts up to June 30
 Tax saving options under New Tax Regime most taxpayers may not be aware of

How do I claim tax exemption under 54F?
November, 06th 2023

I used the capital gains from sale of stocks in FY 22-23 for constructing my house. This is my first property. I missed claiming tax exemption on the amount I spent on construction in ITR for FY2023. Can I revise the ITR and claim exemption under 54F? I will book more capital gains this fiscal year and utilise them for construction of the same house. Can I claim exemption under 54F in the next assessment year also?

 It has been assumed that you had earned long-term capital gain (LTCG) on sale of stocks (original asset) in fiscal 2023 and invested it in one residential house in India (new asset) which is still under construction.

If the net consideration from sale of the original asset is less than the cost of the new asset, then the whole of such LTCG shall be exempt. If the net consideration from sale of the original asset is more than the cost of the new asset, then the LTCG shall be exempt on a proportionate basis.

 Assuming all the prescribed conditions were fulfilled in your case, however you had only missed claiming the deduction in your original tax return filed, you can still revise your tax return within 31 December to claim the exemption to the extent allowable.

It may separately be noted that Section 54F prescribes that in case the net consideration cannot be fully utilized towards construction of the new house till the date of furnishing the return under section 139 of the Act, then such unutilized amount should be deposited before the due date of filing tax return under section 139(1) of the Act, in a specified Capital Gain Account Scheme (CGAS) bank account with authorized banks and utilized in the manner prescribed, to avail of the entire deduction.

In case the said amount remains unutilized for construction of new asset, same shall be taxable upon expiry of 3 years from date of transfer of original asset. You may now not be able to satisfy this condition for FY2022-23 and the same can be challenged by the tax authorities. However, there are judicial precedents to support the contention that if ultimately the house in constructed within the overall timeline there should be no bar in claiming the exemption under Section 54/54F.

Few judicial precedents have held favourably that there is no bar in Section 54/54F towards claiming deduction in multiple years for the same property if the cost of the new property is within the capital gain/ net consideration as applicable.

 Further, courts have also held that in case of an under-construction property, the date of completion of construction within 3 years (and not the commencement of construction) is relevant. Hence, a view may be taken that deduction under Section 54F could be available in fiscal 2024, for investment in the same under-construction property, provided all the other conditions for claim of deduction are fulfilled with respect to the LTCG for fiscal 2024 also, though possibility of this being challenged cannot be ruled out.
Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting