How do I claim tax exemption under 54F?

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—Name withheld on request It has been assumed that you had earned long-term capital gain (LTCG) on sale of stocks (original asset) in fiscal 2023 and invested it in one residential house in India (new asset) which is still under construction. With respect to fiscal 2023, as per Section 54F of the Income-tax Act, 1961, you are eligible to claim a deduction from LTCG arising on transfer of an asset (other than a residential house), with respect to re-investment of the net sales consideration (and not capital gains) into construction of one residential house in India (within a period of three years from date of transfer), subject to the other prescribed conditions.

If the net consideration from sale of the original asset is less than the cost of the new asset, then the whole of such LTCG shall be exempt. If the net consideration from sale of the original asset is more than the cost of the new asset, then the LTCG shall be exempt on a proportionate basis.

Assuming all the prescribed conditions were fulfilled in your case, however you had only missed claiming the deduction in your original tax return filed, you can still revise your tax return within 31 December to claim the exemption to the extent allowable. It may separately be noted that Section 54F prescribes that in case the net consideration cannot be fully utilized towards construction of the new house till the date of furnishing the return under section 139 of the Act, then such unutilized amount should be deposited before the due date of filing tax return under section 139(1) of the Act, in a specified Capital Gain Account Scheme (CGAS) bank account with authorized banks and utilized in the manner prescribed, to avail of the entire deduction.