New Delhi, July 22 -- Every year, numerous taxpayers face unexpected tax notices after claiming exemptions under Sections 54 and 54F of the Income-Tax Act, 1961. The root cause is almost always the same: misunderstanding the mandatory three-year timeframe attached to the Capital Gains Account Scheme (CGAS).

A widespread misconception exists that capital gains tax remains deferred until funds are physically withdrawn from the CGAS account. However, statutory tax provisions offer no such flexibility.

Under Sections 54 and 54F, exemptions are conditional. If money deposited in a CGAS account remains unutilised for buying or constructing a new home, the tax shelter expires automatically. Taxability kicks in precisely three years after the o...