Section 54F Trap: Is Your ₹10Cr CIBIL Safe?
If you sell a non-residential asset and park capital gains in a Capital Gains Account Scheme but fail to reinvest in a home within the deadline, the tax exemption disappears and you owe the government capital gains tax — often a shock at filing time.
Leaving CGAS funds unused is like paying 20% tax on money you already saved — ouch!
Your LTCG tax exemption under Section 54F is capped at this amount
Key Takeaways
Check your CGAS account balance and reinvestment deadline right now — missing it by even one day makes the entire exemption void.
If you cannot buy property in time, consult a CA about whether constructing a house on an existing plot qualifies and extends your window to 3 years.
File your ITR correctly in the year the CGAS deadline lapses — declare the unclaimed exemption as taxable LTCG to avoid interest and penalty under Sections 234A/234B.
If you sell a non-residential asset and park capital gains in a Capital Gains Account Scheme but fail to reinvest in a home within the deadline, the tax exemption disappears and you owe the government capital gains tax — often a shock at filing time.
Here's what happened: Section 54F lets you skip Long Term Capital Gains tax on selling shares, gold, or plots — if you reinvest proceeds into a residential property within prescribed deadlines.. Unused funds parked in a Capital Gains Account Scheme (CGAS) that are not reinvested within 2 years (purchase) or 3 years (construction) become fully taxable as LTCG in the year the deadline lapses.. LTCG on non-residential assets is taxed at 20% with indexation (or 12.5% without, post-Budget 2024), meaning a ₹50 lakh gain left unused could trigger a ₹10 lakh tax bill..
What you should do: Check your CGAS account balance and reinvestment deadline right now — missing it by even one day makes the entire exemption void.. If you cannot buy property in time, consult a CA about whether constructing a house on an existing plot qualifies and extends your window to 3 years.. File your ITR correctly in the year the CGAS deadline lapses — declare the unclaimed exemption as taxable LTCG to avoid interest and penalty under Sections 234A/234B..
You can open a CGAS account in any nationalised bank before your ITR filing due date — not just before the property purchase — giving you breathing room while keeping your exemption intact temporarily.
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- [1]“When reinvestment fails: A look at the tax implications of unused Capital Gains Account Scheme funds” mint - money · 4 Jun 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.