54 F Disallowance presentation in itr 2

[Narayanan swamy]

CAPITAL GAINS QUERRY- PRESENTATION IN ITR 2 IN FY 24-25.

The following are the details

I had claimed 54F benefit of LTCG last financial year ie 2023-24 of Rs. 74,58,474

shares sold on 10/08/2023

flat purchased on 25/08/2023

I purchased another flat in FY 2024-25 on 18/11/2024 – Rs. 3,35,00,000 + sdr 23,25,011 = 3,58,25,011 by selling my old flat and equity shares as under

Sold Another flat (purchased on 22/01/2003 for Rs. 16,67,200+sdr 1,27,750.= 17,94,950) sold on 21/10/2024 for Rs.193,00,000 -to claim 54 benefit

sold shares (long term) on 13/11/2024 sale value Rs. 1,55,01,197 - LTCG Rs. 85.99,913 - to claim section 54F benefit

since i have purchased another flat (on 18/11/2024) within TWO years of sale of original asset (sold on 10/08/2023) Understand that the LTCG claimed in last FY 23-24 of Rs. 74.58 lacs will be disallowed and added back to FY 24-25 income

Querry

How do I present the disallowed LTCG of FY 23-24 (as Long term capital gains) in the ITR 2 of FY 24-25 since i will also be claiming the 54 and 54F benefit in FY 24-25 in the ITR 2 of FY 24-25 (consideration on sale of shares and LTCG on flat sold invested in new flat as above).

AM UNABLE TO FIND THE SAME IN THE ITR 2 FORM OF FY 2024-25 hence the request

regards

Narayanan Swamy

[Ryan Vaz]

The Long Term Capital Gain (LTCG) of Rs. 74,58,474, which was exempted under Section 54F in FY 2023-24, will be deemed taxable income in FY 2024-25. You must report this amount in Schedule CG of ITR 2 for FY 2024-25 under the specific section for re-taxed capital gains due to violation of exemption conditions. Simultaneously, you will compute and claim fresh exemptions under Section 54 and Section 54F for the new flat purchased in FY 2024-25 against the LTCG from the sale of your old flat and shares in the same financial year.

A. Re-taxation of Section 54F Exemption from FY 2023-24:

1. Original Share Sale Date: 10/08/2023.
2. Period for "any other residential house" purchase: Within two years from 10/08/2023, i.e., by 09/08/2025.
3. Date of Purchase of "another" flat: 18/11/2024.
4. Violation: Since 18/11/2024 falls within the two-year period (10/08/2023 to 09/08/2025), the condition of the second proviso to Section 54F(1) is violated.
5. Consequence: The LTCG of Rs. 74,58,474, which was exempted in FY 2023-24, is deemed to be the income of the previous year in which the "other" residential house was purchased, i.e., FY 2024-25. This amount will be added to your total income for FY 2024-25 and taxed at applicable LTCG rates (generally 20% plus surcharge and cess).

B. Computation and Claim of New Exemptions in FY 2024-25:

You have purchased a new flat on 18/11/2024 for Rs. 3,58,25,011. This investment can be used to claim exemptions under Section 54 and Section 54F for the sales made in FY 2024-25.

Summary of Taxable Capital Gains for FY 2024-25:

• LTCG re-taxed from FY 2023-24 (due to 54F violation): Rs. 74,58,474
• LTCG on sale of old flat: Rs. 1,30,99,250
• Less: Exemption u/s 54: Rs. 1,30,99,250
• LTCG on sale of shares: Rs. 85,99,913
• Less: Exemption u/s 54F: Rs. 85,99,913
• Net Taxable Capital Gains for FY 2024-25 = Rs. 74,58,474

AI Summary

Capital gains exemption under section 54F can be re-taxed when another residential house is bought within the prescribed period. Long-term capital gain earlier exempted under section 54F becomes taxable in the previous year in which another residential house is purchased within the prescribed two-year period, because the exemption condition is violated. In ITR-2, the amount should be reported in the capital gains schedule as re-taxed capital gains for the relevant year. A separate new flat purchase in the same year may still support fresh exemption claims under section 54 and section 54F against that year's capital gains, subject to the normal conditions.