Capital gains tax: Telangana HC clarifies when builder delays won't affect your Section 54F tax exemption

The Telangana High Court ruled that taxpayers cannot lose Section 54F capital gains exemption solely because a builder delayed completing or registering a home.

The judgment states delays beyond the taxpayer's control should not defeat the tax benefit if the investment has already been made.

The ruling came in the case of Hyderabad resident Sudhakar Reddy Mettu, who entered into a Development Agreement-cum-General Power of Attorney with a builder on May 31, 2016.

Under the agreement, Mettu was entitled to a 250-square-yard residential villa, which was delayed due to disputes between the builder's partners and completed only in November 2023.

The court held that Section 54F is a beneficial provision and must be interpreted to advance its objective of promoting investment in residential housing.