For Exemption u/s 54F , Net Sales Consideration Should Be Invested or Used and Not The Capital Gains !

I have sold a residential plot on 24/12/2007.and deposited the amount of Capital Gain in Capital Gain Account scheme of SBI before July 2008. Now I want to purchase a Flat with this amount. If i booked today and paid basic cost of flat today(from capital account scheme), but flat would be ready after 3 year from now(in year 2011) can it be OK or i got tax benefit of capital Gain account scheme. The flat is from reputed builder (Supertech Limited). please advice what doc would be required from the builder to get the benefit of tax on Capital Gain Account Scheme. Abha Sharma , Delhi

First of all ,you should note that it is not the capital gain , but net sales consideration which you should have deposited. The ‘Net Sales Consideration means , Sale price of land minus the Expense for sale . Read the Explanation given under Clause 1 of section 54(1) as under

net consideration, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

Although the last date up to which the deposit in CGAS is the date of filing return which was in your case 31st July 2008 , however ,good news is that, as per Tribunal decision , you have still time to deposit the balance amount of sales consideration . For this read this posting Here Is A Recent Good Decision For All Claimants of Deduction Under Section 54F !

Deposit of the Net Sales Consideration  in Capital Gains Account Scheme makes you eligible for exemption u/s 54F  the Assessment year 2008-09 . But as per condition given in section , the amount kept in CGAS account should be spent for

• purchase of house within two years 
•                            or
• construction of residential house within three years

from date of transfer of asset which was sold.

However , as per decision of higher appellate authorities, even if the house is not constructed by the builder within three years, still you will be eligible for exemption u/s 54F. Read this posting

 Can You Get Exemption U/s 54F Even If Builder Does Not Complete House Within Three Years?

Relevant Readings

Can You Claim Exemption For Two Separate Years For Investment In same House ?

Can Exemption u/s 54F Be Claimed For Buying Two Adjacent Flats Joined By Breaking Internal Wall?

How To Use Capital Gains Account Scheme To Save Tax?

How To Minimise Tax On Huge Gains on Property Sale?