How To Get Income Tax Relief on Under-construction Flat Booking ?

Income-tax Appellate Tribunal (ITAT) has ruled that a taxpayer who books an under-construction flat and acquires it within three years of the sale of his old house will be entitled to a tax deduction. Further, ITAT also announced that booking of a flat in an apartment under construction must be viewed as a method of constructing residential tenements. Booking of a new flat in an under-construction apartment should be considered as a case of “construction” and not “purchase”.

In existing Income Tax rule relief under long-term capital gains (LTCG) accrued from sale of a house can be availed only if it is invested in another house within a specified period. 

Under section 54 of the Income Tax Act, the period prescribed for investing the Long Term Capital Gain in a new house is two years from the date of sale of the old house. The tax benefit is also available if a new residential house is constructed by the taxpayer within three years from the date of sale of the old house.

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