Long term capital gains on sale of property is exempted from tax to the extent it is utilized to purchase another residential house within one year before or two years after the transfer of long term capital asset as per section 54 of the Income Tax Act. For construction of house , the time limit is three years. But the question , this post is answering , can the claim of exemption u/s 54 valid when the sales amount of the long term property is used for paying installment or construction of the house which was started construction much earlier than the financial year in which the sale/transfer of the asset took place.
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