Exemption under Section 54EC can’t be claimed in 2 FYs for single property

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The incidence of capital gains arises upon the “transfer” of a capital asset. While transfer has not been specifically defined under the Income-tax Act, based

The incidence of capital gains arises upon the “transfer” of a capital asset. While transfer has not been specifically defined under the Income-tax Act, based on various judicial precedents, property may be construed to be transferred on the date on which all rights and ownership of the property are transferred. The date of entering into an agreement or the date of receiving the payment may not necessarily be the only conclusive aspects.

Exemption under Section 54EC can’t be claimed in 2 FYs for single property

The detailed fact pattern and documentation would need to be reviewed in your case, to determine the exact date (and, therefore, the financial year) of transfer.

As the immovable property has been held for more than two years prior to transfer/sale, the capital gains on sale would qualify as long-term capital gains (LTCG).

You and your brother would need to offer your respective share of LTCG to tax, in the financial year in which the property is considered to have been transferred.

With respect to deduction under Section 54EC of the Act, the same is available in the financial year in which the property is transferred, if the assessee has invested the capital gains in the notified securities, at any time within a period of six months from the date of transfer of property. Accordingly, exemption under Section 54EC of the Act, in respect of a single property transferred, cannot be claimed by the assessee in two financial years. Also, such investment made by the assessee, during the financial year in which the property is transferred and in the subsequent financial year cannot exceed ₹50 lakh.

Further, in case both your brother and you are separately investing your respective share of LTCG in the notified securities within the stipulated timelines, both of you can claim deduction under Section 54EC of the Act, up to ₹50 lakh each, subject to fulfilment of the other conditions prescribed.

source: livemint