Withdrawal of section 54D exemption occurs when replacement property is transferred within three years or CGAS funds remain unutilised.

Exemption under section 54D is withdrawn if the replacement land or building is transferred within three years; the exempted amount is deducted from the replacement asset's cost when computing gain on its transfer. If amounts deposited in the Capital Gains Account Scheme are not used to acquire or construct the replacement property within the prescribed three year period, the unutilised amount is taxed as income in the year the period expires.

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