• Capital gain tax Exemption under section 54F

I had purchased a plot of land in Feb-2007, which was sold in Oct-17 for Rs. 18 lakh. Till date the sale proceeds not utilised but going to purchase a plot for Rs. 25 lakh in a month time and after six month a home loan will be taken for construction and construction will be completed by June-2020. Whether I will be exmepted from capital gain tax by doing so and how it will be shown in IT return of A.Y. 2018-19 and which ITR will be used.
Asked 1 year ago in Capital Gains Tax from SAMASTIPUR, Bihar


Yes, capital gain exemption shall be available.

For AY 18-19, you need to show the calculation of capital gains and the investment in land to claim 54F exemption for construction of residential house property.

For deciding which ITR is applicable, please let us know your other sources of income for AY 18-19.

Lakshita Bhandari
CA, Mumbai
3056 Answers
139 Consultations

5.0 on 5.0


You will be eligible for capital gain tax only if your construction is getting completed before October 2020.

You will have to show the application of money in your return of income. So, you will have to purchase a land before filing your return of income. Otherwise, you will have to put the money in CGDS account.

You will have to use ITR 2.

Abhishek Dugar
CA, Mumbai
3576 Answers
169 Consultations

5.0 on 5.0

Dear Sir,

It is a long term capital gain since plot was purchased in 2007. You can purchase another plot and construction should be completed within three years from the date of transfer i.e. by Oct.2020 to claim the benefit of exemption u/s 54F.

As you sold the plot in F.Y. 2017-18, if the amount has not been utilised for reinvestment till the date of filing of ITR i.e. 31.07.2018, you need to open CGAS account and deposit the net consideration in that account. Further you can make the payments from that account for the construction of the property.

You need to show the above transaction in ITR-2 for A.Y. 2018-19.

We may help you in filing ITR at nominal fees.


Vivek Kumar Arora
CA, Delhi
2520 Answers
112 Consultations

5.0 on 5.0


You will have to transfer the capital gains so made in the previous sale on October 17 to capital gain account scheme latest by July 31 2018.

You can avail loan directly from this account.

Rest of the things will work as far as the the capital gains are invested within 3 years for construction of new property where your scenario will work out.

If you have capital gains then itr 2 has to be filed.



Damini Agarwal
CA, Bangalore
329 Answers
19 Consultations

5.0 on 5.0

You are eligible for capital gains deduction under section 54F. In case if plot is not registered before filing return you need to deposit it in capital gains account. if plot is registered before filing of return than you can straight forward claim capital gains. Further check whether you are eligible for Subsidy under Pradhan Mantri Awas Yojna. & It is advisable that you put only sale proceeds for buying property & rest take as loan. Reason being home loan are cheapest form of loan so effectively if you have business than you will be using saved funds at cheaper rate.

For calculating Capital Gain it will be better if you get it done by a CA to avoid any complications later. Resultant complication can cost you a bomb.

Chirag Maru
CA, Raipur
152 Answers

5.0 on 5.0

You can buy the plot of land before you file your returns and ensure that the construction on it is completed before October 2020 so that you are eligible for capital gain tax.

If you are not able to utilise the funds before filing the return, deposit the capital gains in the capital gains depoait scheme.



Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Yes ,you can claim the exemption but for that you have to purchase a plot before return filling (31.07.2018) or deposit that amount in Capital gain scheme account.And make sure your construction get completed within 3 yrs from date of sale i.e. Oct 2020.

You can use ITR 2 for the same.

Swati Agrawal
CA, Mumbai
1044 Answers
4 Consultations

5.0 on 5.0

Yes, you can use Section 54F to claim tax free long term capital gains. You should however before the due date of filing your iTR, which could be 31 July 2018 if you are not subject to any audit, deposit the underutilized money (Net sales less amount paid for the plot of land you sold) from sale into Capital Gains Account Scheme with a bank if you still have not bought the land by that date. This account is valid for max 3 years. You would need to utilize the amount of the deposit for constructing, including land price, which should be completed within 3 years from the date of sale. You will need to file ITR. So effectively the land should be bought by the last date of the return filing and then you will not have any tax liability as you would have used the entire amount of sale for buying land.

Amit Kumar Narula
CA, Bangalore
59 Answers

5.0 on 5.0

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