| Question And Answer | |
|---|---|
| Subject: | LTCG u/s 45(5A) and exemption u/s. 54 |
| Category: | Income-Tax |
| Querist: | JAYESH SHAH |
| Answered by: | Law Intern |
| Tags: | Capital Gains, redevelopment |
| Date: | April 27, 2026 |
In case of LTCG u/s. 45(5A) whether exemption u/s 54 be claimed by investment in a new residential flat within stipulated period made out of sale proceeds of redeveloped flat? Or is it mandatory to hold newly constructed flat for 3 year?
The new flat received from the developer itself qualifies as the reinvestment (“construction” of a new residential house) for purposes of s.54 and exempts the capital gains arising on redevelopment of the old flat.
Alternatively, the assessee can use his funds to buy or construct a totally separate flat/ house.
In either case, the qualifying new flat/house must be held for at least 3 years, failing which the exemption will be withdrawn.
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