Capital Gains Exemptions

India taxes long-term capital gains at 12.5% without indexation, and the only legal way to reduce that bill is a rollover exemption. CBDT’s own FAQ on the 2024 capital gains overhaul names the routes. Taxpayers “can invest their gains in house under section 54 or section 54F or in certain bonds under section 54EC”. For the full set, CBDT points to “section 54, 54B, 54D, 54EC 54F, 54G of the IT Act”.

Read the table below for what each route covers. Then read the paragraph under it, because the most common mistake on this page is not choosing the wrong section. It is missing the reinvestment deadline and paying full tax on a gain you had already planned to shelter.

Which section covers which asset?

The routes are asset-specific and they do not overlap. You cannot use the house-sale section to shelter a gain on shares. You cannot use the bond section on a gain from a business asset. Match your asset to the row first, then check the conditions.

Rollover exemption sections named by CBDT. Source: CBDT FAQ on capital gains, issued via PIB, 24 July 2024.
Section	Gain it covers	What you must reinvest in	Cap stated by CBDT
54	Long-term gain on a residential house	Another residential house	No cap stated in the FAQ
54B	Gain on agricultural land	Other agricultural land	No cap stated in the FAQ
54D	Gain on compulsory acquisition of industrial land or building	Land or building for the same industrial undertaking	No cap stated in the FAQ
54EC	Long-term gain, invested in specified bonds	Notified long-term specified bonds	₹50 lakh
54F	Long-term gain on any asset other than a residential house	One residential house in India	No cap stated in the FAQ
54G	Gain on shifting an industrial undertaking out of an urban area	Assets at the new location	No cap stated in the FAQ

CBDT’s FAQ answers the cap question only for bonds. Its words on the ₹50 lakh figure are exact. It allows “investment of capital gain in 54EC bonds (up to Rs. 50 lakh)”. In other cases the gain is exempt “subject to certain specified conditions”. Those conditions include monetary and timing limits set inside the sections themselves. We are not printing those figures here, and the reason is at the end of this page.

What is the gain you are actually trying to shelter?

Work out the tax first. An exemption can cost more in locked-up money than it saves in tax. The rates and holding periods below are the ones this site tracks.

Capital gains treatment by asset. As of 17 August 2026.
Asset	Long-term after	Short-term rate	Long-term rate	Indexation
Listed equity shares and equity mutual funds	12 months	20%	12.5% above ₹1,25,000 a year	No
Immovable property	24 months	Slab rate	12.5% without indexation (20% with indexation optional for pre-23 July 2024 purchases)	Optional, legacy only
Gold, jewellery, unlisted shares	24 months	Slab rate	12.5%	No
Debt mutual funds bought on or after 1 April 2023	Not applicable	Slab rate	Slab rate	No
Sovereign Gold Bonds held to maturity	8 years	Slab rate	Fully exempt at maturity	Not applicable
Virtual digital assets	Not applicable	30% flat	30% flat	No, and no loss set-off

Two rows on that table make the rollover question moot. Debt funds bought after April 2023 have no long-term category, so there is no long-term gain to roll over. Crypto is taxed at a flat 30% with no set-off, and no exemption section reaches it. Anyone selling you a capital gains shelter for crypto is selling a problem. Our page on mutual fund taxation works through the fund side in more detail.

How do you read the section 54F condition that catches people?

Section 54 and section 54F look similar and behave very differently. Section 54 shelters a gain on a house you sold, and the exemption is measured against the gain. Section 54F shelters a gain on something else: shares, gold or land. There the reinvestment test is measured against the whole net sale consideration.

That difference is the trap. Sell shares for a large amount with a small gain. Section 54F then asks you to put the large amount into a house. Put in only part of it and the exemption is proportionate, not full. People plan around the gain figure and are surprised by the proportion. Check the arithmetic before the sale, not at filing time.

What if the money has not been reinvested by the filing date?

This is where the Capital Gains Account Scheme exists, and it is the least understood part of the whole subject. The reinvestment windows in these sections run for years. Your return is due within months. So the law lets you park the unspent gain in a designated capital gains account at a bank. Do it before you file and it counts as invested.

The mechanism matters more than any figure. Money in an ordinary savings account does not count, however honestly you intend to spend it later. It must be in the designated scheme account. And you must eventually spend it on the qualifying asset. Miss the section’s window and the amount becomes taxable in the year it closes. The deferral is real. The escape is not.

How does an exemption get withdrawn?

Every rollover section has a clawback. Sell the new asset too soon, or convert the bond, and the exemption you claimed comes back as a capital gain. It is charged in the year you break the condition. Not in the original year. So a clean claim in one year can turn into a demand three years later.

The practical consequence is that these sections lock up money. A 54EC bond is a fixed-income instrument you cannot exit at will. A replacement house cannot be flipped. Ask whether you can leave the asset alone for the whole period. If the answer is uncertain, paying 12.5% now may be cheaper. Later, the deadline is chosen for you.

Which route should you choose?

For a property sale where you are buying another home anyway, section 54 is the obvious route. It is doing what the section was written for.

Suppose you do not want another property. Section 54EC bonds are the honest answer, with the ₹50 lakh cap CBDT states. Be clear about the trade. You lock money into a low-yield bond to avoid a 12.5% tax. The bond may yield well below what you could earn elsewhere. Over the full lock-in, the exemption is then worth less than it looks. Run that comparison against current bond yields before you commit.

For a share or gold sale, section 54F only helps if you genuinely want a house. Buying a house to save tax is the most expensive way to save tax that exists in the Act. Is the property in India while you live abroad? Read the NRI property rules first. The TDS mechanics change the cash flow entirely. The related computation for a house sale is covered on capital gains on property.

Frequently asked questions

Have these section numbers changed under the Income-tax Act, 2025?

The numbering has changed. The Income Tax Department’s e-filing portal says the Income-tax Act, 2025 applies “for Tax Year 2026-27 onwards”. It replaces the 1961 Act. Provisions have been renumbered across the new Act. We could not open CBDT’s own text of the new sections to confirm the new numbers. So this page uses the 1961 Act numbering that CBDT’s FAQ itself uses. Quote the old number to your chartered accountant and confirm the new one before you file.

Can I claim two exemptions on the same gain?

Not on the same slice of gain twice. You can split a single gain across routes. Part into a house, part into bonds, each within its own limits and deadlines. What you cannot do is count the same rupee under two sections. Document the split at the time. Reconstructing it later in front of an assessing officer is unpleasant.

Does the exemption apply to short-term gains?

No, with narrow exceptions written into individual sections. The rollover regime is built around long-term gains. A short-term gain on listed equity is taxed at 20% under section 111A. No reinvestment saves it. That is a strong argument for holding a listed asset past twelve months where you can.

Is a house bought abroad eligible under section 54 or 54F?

Section 54F requires a residential house in India. CBDT’s FAQ does not restate it. But the “in India” condition is written into the section. Treat an overseas purchase as ineligible unless your adviser confirms otherwise on the current text.

Do these exemptions exist under the new tax regime?

Yes. Rollover exemptions are not deductions under Chapter VI-A. So the old-versus-new regime choice does not remove them. They work by keeping the gain out of the charge, not by reducing your total income. See old versus new tax regime for what the regime choice actually costs you.

What this page deliberately does not state

Four things are missing, on purpose. The monetary cap on sections 54 and 54F. The exact reinvestment windows in months. The lock-in period on 54EC bonds. And the section numbers under the Income-tax Act, 2025.

Each of those is a specific figure that would change your filing. Each sits in the text of the Act. The government’s own site returned an access error on every attempt, on 6 and 7 September 2026. Every other publisher prints them from memory or from each other. We would rather explain the mechanism and send you to a professional for the number. Printing a figure we could not check against the statute is worse.

Sources

CBDT, FAQs issued by CBDT on the new capital gains tax regime proposed in the Union Budget 2024-25, PIB, PRID 2036604. Primary. Read 7 September 2026. Source for the section list, the ₹50 lakh 54EC figure, the 12.5% and 20% rates, the ₹1.25 lakh exemption and the holding periods.
Ministry of Finance, Capital gains taxation simplified and rationalised, PIB, PRID 2035596. Primary. Read 7 September 2026.
Income Tax Department, e-filing portal. Read 7 September 2026, for the statement that the Income-tax Act, 2025 applies for Tax Year 2026-27 onwards.
Site data: capital gains rates and holding periods, as of 17 August 2026.