When a taxpayer wants to claim exemption under Sections 54, 54B, 54D, 54F, or 54G for long-term capital gains from the sale of different assets and cannot fully utilize the funds needed to acquire the asset before the deadline for filing an ITR, they must deposit the remaining funds into a Capital Gains Account that must be opened with a bank in accordance with the Capital Gains Account Scheme. The funds placed in the Capital Gains Account must be used by the taxpayer within the time frame specified by the applicable law.
When agricultural land is sold and the capital gains are invested for the purchase of another agricultural property within two years of the original agricultural land's selling date, Section 54 B exempts the seller from paying tax on long-term capital gains. Let's say the funds placed in the capital gains account are not used entirely or in part for the intended purpose. The amount that was claimed to be exempt in prior years is then assessed as capital gains in the year that the stipulated period ends.
Since the two-year period is coming to an end on October 15, 2024, and you believe that by then you won't be able to use the money to purchase more agricultural land, the long-term capital gains that you claimed to be exempt for the fiscal year 2022–2023 will now be subject to taxation as long-term capital gains for the current fiscal year 2024–2025. After the allotted time has passed, you cannot purchase agricultural property to guarantee that the claimed exemption is not revoked.
One should not believe they can avoid reversing the exemption claimed under Section 54B by investing in a residential house now by using Section 54F, even though the three-year period for investing under Section 54F is applicable for assets other than residential houses. Instead, you would have to claim exemption under Section 54B while filing your Income Tax Return.
