Total exemption under 54EC can be only 50 lakhs between one and subsequent financial years. You can sell multiple properties and invests all proceeds into one house to claim an exemption under section 54F. But you should not own more than one residential house on the date of transfer, other than the one bought for claiming exemption under this section.
Capital gains exemption under section 54 F
I sold a few plots of value 70 lakhs in the current year 2021-22 and earned long-term capital gains of Rs 50 lakhs which I have deposited in 54 EC capital gains bonds for saving capital gains tax. Subsequently, in the current year, I sold plots of value Rs 30 lakhs ( with capital gains of 21 lakhs) which I wish to deposit (the full sale value of 30 lakhs) in the Capital Gain Deposit Account Scheme(under section 54F) for constructing my first residential house of 60lakhs in the next 3 years. Next year(2022-2023) I plan to sell more of my plots worth almost the same value as above ie, say 100 lakhs with say capital gains as 70 lakhs from it. I plan to deposit 50 lakhs of capital gains from 70 lakh sale value in 54 EC bonds. Can I use the remaining 30 lakhs for deposit in the same 54 F Capital Gain Deposit Account Scheme next year for constructing the above residential house of 60 lakhs? Or Do I have to open a new Capital Gain Account for it? can I club the 54F investments of 2 consecutive years to construct my residential house? With the above approach, will I get full capital gain tax exemption under 54EC and 54F for the current and next financial years? If not, how much exemption will I get and How much tax will I have to pay? What value of the house should I construct to get full exemption from 54F? I wish to maximize my exemptions and use the advantage for constructing my first residential house at about Rs 60 Lakhs. Please guide me.
Asked 2 years ago in Capital Gains Tax
Based on above calculations and assumptions you can surely save entire capital gain tax but it will surely complicate things especially depositing amount in CGAS for same house by selling different plots hence it is advisable to use the entire sale consideration before filing return of income in purchasing plot etc.
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Thank you.
Just summarizing the details mentioned before my answer. Correct me if I am wrong.
2021-22 - Sale value of plots - 70 lacs and capital gain is Rs.50 lacs. Already deposited in 54EC bonds
2021-22 - Sale value of plots - 30 lacs and capital gain is Rs. 21 lacs. Yet to open CGDAS for deposit of 30 lacs
2022-23 - Sale value of plots - 100 lacs and capital gain is Rs. 70 lacs. Out of 70 lacs capital gain, Rs. 50 lacs profit would be invested in bonds u/s 54EC and remaining Rs. 20 lacs profit belongs to Rs. 30 lacs sale value.
Yes entire capital gain would be saved as per the above investments and deposits. Open separate capital gain deposit account scheme due to different financial year for the transfer of the properties. Compltete the construction within 3 years from the date of the transfer. Open CGAS before 31st July of financial year following the year of the tranfer of the land.
For detailed discussion you may opt for phone consultation.
It is advisable to invest all the sale consideration in 1 house to claim exemption under section 54F.
Please make sure u should have only 2 residential house on date of transfer.
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