The three main exemptions
| Section 54 | Section 54F | Section 54EC | |
|---|---|---|---|
| Asset sold | Residential house (long-term) | Any long-term asset other than a house | Land or building (long-term) |
| Invest in | Residential house in India | Residential house in India | NHAI, REC, PFC, IRFC or notified bonds |
| Amount to invest | Capital gain | Net sale consideration (proportionate otherwise) | Capital gain, max ₹50 lakh |
| Time limit | Buy 1 yr before/2 yrs after; build in 3 yrs | Same as 54 | Within 6 months |
| Cap | ₹10 crore | ₹10 crore | ₹50 lakh per year |
| Lock-in | 3 years | 3 years | 5 years |
Capital Gains Account Scheme
If you haven't bought or built the new house by the ITR due date, deposit the unutilised amount in a Capital Gains Account Scheme account with a bank before that date. The exemption is then provisional until it is used within the time limit; unused amounts become taxable when the period ends.
Conditions people miss
- 54F: you must not own more than one house (other than the new one) on the sale date
- 54: two houses allowed once in a lifetime if the gain is ≤ ₹2 crore
- The new house must be in India
- Selling the new house within 3 years reverses the exemption
Worked example: selling a flat and buying a bigger one
- 1Long-term gain on the old flat: ₹60 lakh.
- 2New flat bought 8 months later for ₹1.2 crore — more than the gain.
- 3Section 54 exemption = ₹60 lakh (the full gain).
Capital gains tax: nil, provided the new flat is held for 3 years.
