Amendments to Section 54 – Capital Gains Exemption Taxpayers can now obtain a long-term capital gains exemption on the sale of a house by investing in two houses (upper limit of Rs 2 crore). Earlier, the exemption was available for investment in only one property.

Conditions for availing this benefit:

1. The new property can be purchased either 1 year before the sale or 2 years after the sale of the property.
2. The gains can also be invested in the construction of a property, but construction must be completed within three years from the date of sale.

Exemption under section 54 can be claimed in respect of capital gains arising on transfer
of capital asset, being long- term residential house property. With effect from assessment
year 2019-19, the period of holding in case of immovable property, being land or
building or both, is reduced from 36 months to 24 months, to qualify as long-term capital
asset. This benefit is available only to an individual or HUF. In this case the house
property is sold after holding it for a period of less than 24 months and, hence, it is a
short-term capital asset. The benefit of section 54 is not available in respect of a short term capital asset

1. if you are purchasing a new house then the time period to invest the capital gains for purchase of the new house is 3 years from the date of sale of the old property

2. if you are buying an under construction house then you have 3 years time to construct (through the builder) counted from the date of sale of the old property

3. there is no upper limit for claiming capital gains tax exemption. the entire capital gains accrued to you on sale of your old property can be invested for purchase or construction of the new property and you will get exemption for the full amount of the capital gains so invested

4. you simply have to invest the capital gains within the statutory period as above. it does not matter where the funds are coming from - whether from the property sold first or from the property sold later

5. in case of purchase of an under construction house, you would be paying the purchase consideration to the builder stage wise, that is, as per the construction of the various slabs of the building. in such a case before the due date of filing of your income tax returns, you have to deposit the capital gains money in a nationalised bank in a capital gains account under a capital gains account scheme. as and how you get the demand notice from the builder, you have to fill in the applicable form and the bank will release that amount to the builder by issuing a demand draft in favour of the builder

6. if the construction of the building goes beyond 3 years from the date of sale of your old property, then any amount paid beyond that period will not be eligible for claiming capital gains tax exemption. so in that case it would be prudent to open 2 different capital gains accounts to which the capital gains proceeds of the 2 properties you sell would be separately deposited and use the funds from that capital gains account in which the capital gains of the property sold latest was deposited

Yes you will get the exemption

You can  claim benefit of capital gains exemption on sale of 2 properties to purchase new flat 

2) it is based on full contract value of purchased property 

The capital gains can also be invested in the construction of a property, but construction must be completed within three years from the date of sale.

One can claim this benefit by either purchasing/ constructing a new residential property or by depositing the amount of sale proceeds in Capital Gains Account Scheme in any authorised/approved bank.

To claim exemption under section 54, the taxpayer should purchase another house within a period of one year before or two years after the date of transfer of old house or should construct another house within a period of three years from the date of transfer.

If till the date of filing the return of income, the capital gain arising on transfer of the house is not utilised (in whole or in part) to purchase or construct another house, then the benefit of exemption can be availed by depositing the unutilised amount in Capital Gains Deposit Account Scheme in any branch of public sector bank, in accordance with Capital Gains Deposit Accounts Scheme, 1988.

The new house can be purchased or constructed by withdrawing the amount from the said account within the specified time-limit of 2 years or 3 years, as the case may be.

There is no tax to be paid if you use the entire gain from the transaction to buy another house within two years or construct one within three years.

2)under section 54EC the capital gains are required to be invested and not the sale proceeds.
  

3) The amount of capital gains can be kept in the Capital Gain Accounts in accordance with the Capital Gain Accounts Scheme, 1988 (CGAS), if the re-investment in the house property (under section 54) or in capital bonds (section 54EC) is not made till the date of filing the tax return. Also, if the taxpayer has already invested some of the portion of the proceeds/gains in the specified asset, he would be only required to transfer the balance portion in the CGAS in order to claim tax exemption on the entire amount,”

The cash payment will be reflected in your tax returns and you need to explain the so much cash payment