• Section 54F

I had acquired Allotment of Flat from Builder and claimed LTCG Exemption U/s 54F (FY 2014-15) on 20-NOV-2014 and paid the Down Payment amount demanded by the Builder on 16-JUL-2015. 
Balance amount was deposited in CGAS Scheme and is yet to be utilised. In view of the latest provision of holding being reduced to 24 months for LTCG can I Sell the Allotment in AUG-2017 (FY 2017-18) without inviting any Tax Liability. In case I can Sell the Allotment how do i deal with the amount deposited in CGAS Scheme.
Asked 7 years ago in Capital Gains Tax

Sir need to check the allotment letter. Only on possession of the property you become the owner and thus STCG/LTCG is calculated.

Need to check whether you have obtained the possession from the builder.

Shyam Sunder Modani
CA, Hyderabad
1408 Answers
164 Consultations

5.0 on 5.0

Hi,

As you have invested the part of capital gain amount to purchase of the property under section 54F.

The government restricts the sale of new residential property for another 3 years. As per thr rule -If a person again sells his new residential property, He/she is liable to pay back the exempted capital gains tax. The exemption in the first place would be withdrawn.

The ultimate impact of the restriction is as follows:

• The restriction will be imposed, if after claiming exemption under section 54, the new house is sold before a period of 3 years from the date of its purchase/completion of construction.

• If the new house is sold before a period of 3 years from the date of its purchase/completion of construction, then claimed capital gains exemption would be deducted from the cost of new property. It will increase the capital gain from the new property.

As regards to amount invested in CGAS- if you are fail to utilised the amount in the construction/purchase of the residential house within the period of three years, you are liable to pay the long term capital gain tax in the financial year in which the time period expired.

Vishakha Agarwal
CA, Bangalore
448 Answers
85 Consultations

5.0 on 5.0

Dear Sir,

You cannot sale the house property within 3 years of acquiring or constructing the same. If you do so then the benefit granted under section 54F will be withdrawn and capital gain foregone in earlier year will be chargeable in this year.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Finance Bill amended the definition of long term capital gain by reducing it from 3 years to 2 years, as mentioned by you. However, section 54F, under which you claimed exemption, is not amended by the Finance Bill 2017. Hence, the restriction on the period of holding upto 3 years continues.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

Hi,

period of holding will be calculated From the date of allotment, if conveyance title has been passed on that date.

Vishakha Agarwal
CA, Bangalore
448 Answers
85 Consultations

5.0 on 5.0

Hello Sir,

In case of under construction property, you can calculate 36 months from the date of allotment. You can very well sell your under construction property after the expiry of 36 months but be prepared to fight it out (litigation) as the AO is always from the revenue's point of view and may not consider your point.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Hi,

yes, you can sell the property in FY 2018-19. if in buyer builder agreement it is clearly mentioned that builder gave a right to obtain conveyance on the said flat

.

As a right to obtain conveyance of immovable property is clearly "property". Therefore, if the booking agreement and allotment terms and conditions of the builder gave a right to obtain conveyance on the said flat, the property after fulfilling certain conditions, that itself becomes "an asset" under the Income-tax Act.

if you are selling the flat after taking possession of the flat, the period of three years starts from the date of taking possession of the flat.

kindly go through the link for your reference:

https://housing.com/news/calculating-the-holding-period-for-an-under-construction-property/

Vishakha Agarwal
CA, Bangalore
448 Answers
85 Consultations

5.0 on 5.0

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