54F Exemption in consecutive 2 years towards installments paid for new house

[Rajat Gupta]

Can we claim 54 F exemption across 2 years towards installments paid for one new residential house? will it be allowed? How to show in ITR,total installments paid in one year or total cost of new residential house

[Padmanathan KV]

You will have to deposit the amount in Capital Gains Deposit Account in the year in which Capital Gains arises. In ITR, you can claim deduction towards amount actually utilized plus amount deposited in CG Deposit A/c. Thereafter, in year 2 you can utilize from the said account to make payment towards second installment.

AI Summary

54F exemption for residential house permits depositing capital gains and utilising the deposit across two years. The taxpayer must deposit unspent capital gains in a Capital Gains Deposit Account in the year the gains arise; in the ITR the taxpayer may claim deduction for the amount actually utilised for the new residential house plus the amount deposited in the deposit account. Amounts in the Capital Gains Deposit Account may thereafter be utilised in a subsequent year to pay later instalments for the same new residential house, with those utilisations treated for deduction when applied.