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Capital Gains Exemption
Three exemption routes for LTCG. 54 — sell residential, buy residential. 54F — sell any LTCG asset, buy residential (must invest entire net consideration). 54EC — invest in NHAI/REC/IRFC bonds, 5-year lock-in, max ₹50L.
How it works
We map your gain to one of three sections in the Income Tax Act. Section 54 requires reinvestment of the capital gain into one residential house in India within 2 years (purchase) or 3 years (construction). Section 54F applies when you sell any long-term asset other than a residential house — the full net consideration (not just the gain) must be invested, and you must not own more than one other residential house. Section 54EC permits investment up to ₹50 lakh in 5-year NHAI, REC, IRFC or PFC bonds within 6 months of sale.
Worked example
A Bengaluru flat bought in 2014 for ₹60 lakh sold in 2026 for ₹1.6 crore — indexed cost ≈ ₹95 lakh, LTCG ₹65 lakh, tax @ 12.5% post-Budget 2024 ≈ ₹8.1 lakh. Under Section 54, buying another Bangalore flat for ₹70 lakh exempts the entire ₹65 lakh gain. Alternatively, parking ₹50 lakh in NHAI 54EC bonds at 5.25% and paying tax on the remaining ₹15 lakh leaves a ₹1.87 lakh tax bill plus locked-in bond capital. The Budget 2023 cap of ₹10 crore on Section 54/54F still applies.
When to use this
- Selling an ancestral Mumbai or Pune flat in retirement
- Exit from ESOP shares vested years ago and looking to invest into a primary home
- Booking gold or unlisted equity gains and choosing 54EC over 54F
Compute the indexed LTCG first using our capital gains calculator, and see capital gains tax in India 2025 for the post-Budget rates.
FAQ
When must I reinvest for 54 / 54F?
Within 1 year before sale OR 2 years after sale (purchase) / 3 years (under-construction). Timing strict — track from sale date.
Can I claim 54 + 54EC together?
Yes — they don't overlap. Section 54 covers reinvestment in residential property; 54EC covers ₹50L in specified bonds. Both can be claimed in the same FY.
Section 54F — full sale value or just gain?
54F requires entire NET sale CONSIDERATION (not just gain) to be reinvested for full exemption. Partial reinvestment gets proportional exemption only.