Educational guide
Capital Gains Exemption — Sections 54, 54B, 54EC, 54F
There are four major reinvestment exemptions for long-term capital gains. Picking the right one can wipe out the entire LTCG bill.
// section 54 — house to house
Sell a residential house held > 24 months, reinvest the LTCG in another residential house within 2 years (or construct within 3 years). The exemption is capped at the LTCG amount or the new house cost, whichever is lower.
// section 54f — long-term asset to house
Sell any long-term capital asset (not a house), reinvest the entire net consideration in one residential house. Exemption is proportional: (LTCG × Reinvestment) / Net Consideration.
// section 54ec — into psu bonds
Invest up to ₹50 lakh of LTCG from sale of land/building in REC/PFC/IRFC bonds within 6 months. 5-year lock-in. Eliminates LTCG to the extent of investment.
// section 54b — agricultural land
Reinvest LTCG from urban agricultural land into another agricultural land within 2 years. Applicable to individuals and HUFs only. New land must be used for agriculture and held for 3 years to retain the exemption.
// frequently asked questions
Yes — you can claim Section 54 for the portion reinvested in a new house and Section 54EC (up to ₹50 lakh) for the balance. Many high-value property sales use this stacking to minimise tax.