Changes in applicability of 54 F exemtions in the new budget

I bought a property in Chennai for 10 l in 1992 which i am selling for Rs 1.5 cr now . I also have 50 % share in a villa which I own jointly with my wife .Can I invest entire 1.5 cr and claim 54 F benefit as per new budget presented by Mr Jaitlet . Can I use the fund to set off a housing loan which I have since 2006.I believe I can not buy two flats but can I make an agreement for one flat combining two flats .

M S Balasubramanain

asked Jul 13 '14 at 19:04 by Bala 111

Sec 54F

This section is available to all those assets other than residential houses. So for claiming long term capital gains arising from selling of land, this section is utilized. Here one can claim relief on the tax liability on capital gains but with following conditions: The options for claiming exemption are the same as under sec 54 .

The amount of exemption available is derived as

Amount of investment*Capital Gains/Net Consideration

One of the primary conditions which differentiate this section from Sec 54 is that the assesse can hold only one property other than the new residential property on the date of transfer. Even after three years of purchase of the new property, no new property can be bought else the capital gains become taxable.

Thus, if one has made gains form a land then the exemption can be availed under Section 54F provided the conditions laid in the section are fulfilled. Unlike Sec 54, here the entire capital gains are exempted when the amount of investment is equal or greater than the net consideration else the proportionate exemption is allowed.

In both Sec 54 & Sec 54F, the exempted property cannot be sold within three years of acquisition else the taxability on gains will arise with respective section clauses. Both these sections are available to property investors for claiming long term capital gains tax exemptions. Apart from these, Capital Gains bonds under Sec 54EC are also available for claiming exemption of tax on long term capital gains earned from long term assets. But it’s wiser to take the help of an appropriate professional to utilize any of the sections illustrated here so that you do not face any disappointment later.

For more information check :

answered Aug 23 '15 at 23:28 by Yash M Jhaveri 611


There are no changes in section 54F in this budget. All conditions and rules which were there earlier are as it is.

If you invest whole 1.5 cr (whole sale consideration amount) into new residential house property, then you can avail tax benefit u/s 54F.

There are some conditions for 54F applicability:

  1. You should not be owning more than one residential house property at the time of sale of property.
  2. New residential property should not be sold in next three years of possession.
  3. Possession of new residential propertyshould be received within two years of sale.
  4. In next three years, total residential house properties owned by you cannot be more than two.

answered Jul 15 '14 at 11:17 by Pankaj Batra 5.2k320


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Asked: Jul 13 '14 at 19:04

Seen: 3,192 times

Last updated: Aug 23 '15 at 23:28