ITR Filing 2024: Can I claim capital gains exemption for two plot sales by investing in one house?

I sold urban land and deposited the money in the Capital Gains Account Scheme before the due date for filing the ITR. In the current year, I have sold another urban land. I wish to invest the money, as well as the money lying in the capital gains account, in a residential house in the current year. Can I claim an exemption under section 54F?   

Section 54F provides an exemption for long-term capital gains on the sale of any capital assets other than a residential house if the assessee invests the sale proceeds of the capital asset for buying or constructing a residential house within the prescribed period. The purchase of the residential house must be made within two years from the date of the capital asset's sale.

Even the purchase of a residential house made within one year before the date of sale also qualifies for the exemption. If you opt for self-construction or book an under-construction house, you get an extended period of three years for making such an investment. The amount not utilised for investments in a residential home by the due date of filing of the ITR has to be deposited in an account under Capital Gains Deposit Account with a bank, which can be utilised within the prescribed period for purchasing a residential house.

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The law requires that you invest the sale proceeds in one residential house in India to claim an exemption under Section 54F. Still, there is no restriction on the taxpayer claiming the exemption by investing in one residential house property for more than one transaction of long-term capital gains eligible for exemption under the section as long as the same is done within the prescribed period. This has been decided by various Income Tax Tribunals.

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So, you can claim exemption from long-term capital gains by investing money in the capital gains account, and the money realised on the sale of land in the current year by investing in a single house during the current year.

Balwant Jain is a tax and investment expert and can be reached at jainbalwant@gmail.com and on @jainbalwant on Twitter.