Circular No. 1/2023

Extension of time limit for compliance to be made for claiming any exemption under section 54 to 54GB of the income tax act 1961 act in view of the then covid 19 pandemic

What this is

Circular No. 1/2023 was issued by the Central Board of Direct Taxes on 6 January 2023. Its subject is Extension of time limit for compliance to be made for claiming any exemption under section 54 to 54GB of the income tax act 1961 act in view of the then covid 19 pandemic.

This is an extension of time. It moves a date that the Act or the Rules otherwise fix, and it does so only for the compliance and the period it names — not for anything else that happens to fall due at the same time.

What it does

Widens the COVID relaxation for capital gains reinvestment. Where the last date for an investment, deposit, payment, acquisition, purchase, construction or other action needed to claim an exemption under sections 54 to 54GB fell between 1 April 2021 and 28 February 2022, that action may be completed on or before 31 March 2023. This replaces the narrower window in Circular No. 12 of 2021 dated 25 June 2021, whose point 7 had covered last dates falling between 1 April 2021 and 29 September 2021 and allowed completion by 30 September 2021.

Why it was issued

Representations were received, and on further consideration of the then-prevailing COVID-19 pandemic and the resulting restrictions, the Board accepted that taxpayers faced genuine hardship in completing these compliances.

Who it reaches

Sellers of a residential house whose section 54 purchase or construction date fell in that window
Taxpayers claiming exemption under section 54F or section 54EC on a 2021 transfer
Persons claiming exemption under section 54GB on subscription to a start-up's shares
Advisers computing capital gains for assessment years 2021-22 and 2022-23

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.54	s.82
s.119	s.239

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

F. No. 2251 4912021-ITA-1l
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
•••••
Circular No~ of2023
New Delhi, dated 06 January, 2023
Subject: Extension of time limit for compliance to be made for claiming any exemption under
Section 54 to 54GB of the Income-tax Act,1961 (' Act') in view of the then-Covid-19 pandemic
-reg.

The Central Board of Direct Taxes (hereinafter referred to as "the CBDT") had vide
Circular No. 12 of2021 dated 25.06.2021 provided relaxation in respect of certain compliances
to be made by taxpayers including inter alia investment, deposit, payment, acquisition,
purchase, construction or such other action, by whatever name called. for the purpose of
claiming any exemption under the provisions contained in Section 54 to 54GB orthe Incometax Act, 1961 (hereinafter referred to as "the Act"). By point 7 of the Circular it was provided
that the aforementioned compliances for which the last date of such compliance fell between
01" April, 2021 to 29'" September 2021 (both days inclusive), may be completed on or before
30'" September, 2021.

In view of the representations received and on further consideration of the thenprevailing COVID-19 pandemic and resultant restrictions imposed, causing genuine hardship
faced by taxpayers in making the aforementioned compliances under the Act, the CBDT, in
exercise of its power under Section 119 of the Act, hereby provides that the compliances to be
made by the taxpayers such as investment, deposit, payment, acquisition, purchase.
construction or such other action, by whatever name called, for the purpose of claiming any
exemption under the provisions contained in Section 54 to 54 OB of the Act, for which the last
date of such compliance falls between 01" April, 2021 to 28th February, 2022 (both days
inclusive), may be completed on or before 31 51 March 2023.

~ d-.\-
(Ravinder Maini)
Diredor to the Government of India.

Copy to:
1. PS to F.M.I PS to MoS (F).
2. PS to Revenue Secretary.
3. Chairman (CBDT)& All Members of CBDT.
4. All Pro CCsIT/CCsITIPr. DGsITIDGsIT.
5. All Joint Secretaries/CsIT, CBDT.
6. DirectorslDeputy SecretarieslUnder Secretaries ofCBDT.
7. Web Manager, with a request to place the order on official Income-tax website.
8. CIT (M&TP), Official Spokesperson ofCBDT with a request to publicize widely.
9. lCIT, Data Base Cell for placing it on irsofficersonline.gov.in.
10. The Institute of Chartered Accountants of India, IP Estate, New Delhi.
11. All Chambers of Commerce.
12. The Guard File.

~ . 0& IQ 1\'l.o"2-S . (Ravmder MaID )
Director to the Government of India.

What to watch

The gate is the last date of the compliance, not the date of transfer — the original due date must fall between 1 April 2021 and 28 February 2022.
A compliance whose last date fell before 1 April 2021 or on or after 1 March 2022 gets nothing from this circular.
The outer date, 31 March 2023, has passed, so nothing further can be done under it now; it is used to defend a completed act.
The circular relaxes the time for the act; it does not relax the deposit requirement or any other condition of the sections themselves.

Where you meet it

When an exemption under sections 54 to 54GB is disallowed in assessment for a 2021 transfer because the investment or construction was completed after the statutory date.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

A house is sold in May 2021 and the two-year purchase window is not in issue, but the assessee had to deposit the unutilised gain in the capital gains account scheme by 31 July 2021. That last date falls inside 1 April 2021 to 28 February 2022, so the deposit made in, say, November 2022 is in time, being before 31 March 2023. Had the last date been 15 March 2022, the circular would not have helped.

What it names

It mentions. Circular No. 12/2021

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 12/2021 — Extension of time limits of certain compliances to provide relief to taxpayers in view of the severe pandemic 25 June 2021
Notification No 39 /2020 [F. No. 370142/23/2020-TPL] / SO 2126(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 29 June 2020
Notification No.35 /2020 [F. No. 370142/23/2020-TPL] / SO 2033(E) — Ministry of Finance 24 June 2020
Circular No. 743 — 432. Taxability of unutilised deposit under the Capital Gains Accounts Scheme, 1988 in the hands of the legal heirs of t 6 May 1996
Circular No. 672 — 429. Whether allotment of flats/houses by co-operative societies and other institutions, whose schemes of allotment and 16 December 1993
Circular No. 667 — 431. Whether, in cases where the residential house is constructed within the specified period, the cost of such resident 18 October 1993

← Circular No. 2/2023 · Circular No. 25/2022 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.