Under what circumstances can the exemption under Section 54F be forfeited?

Ans.  The exemption claimed by assessee under s​ection 54F can be withdrawn in the following circumstances:

a) Acquisition of Second House: Where assessee purchases a residential house, other than the new house, within two years after the date of transfer of original asset or constructs a residential house, other than the new house, within three years after the date of transfer of original asset and the income from such house is chargeable to tax under the head Income from House Property, the exempted long-term capital gain becomes taxable in such previous year.

b) Non-Utilisation of amount deposited in capital gain account scheme:

Where amount deposited in capital gain account scheme is not utilised to purchase a residential house within 2 years after the date of transfer or to construct a residential house within 3 years of the date of transfer, the unutilised deposit shall be deemed to be long-term capital gain of the relevant previous year in which the time-limit of 3 years expires.

c)  Transfer of new house within 3 Years: If new house so purchased or constructed is transferred within a period of 3 years of its purchase/construction, the exempted capital gain becomes chargeable to tax as long-term capital gain in the relevant previous year in which the transfer takes place.