Section 54 - Capital Gains Exemption on Sale of Residential House
Long-term capital gains from sale of a residential house are exempt if the proceeds are reinvested in purchasing or constructing another residential house within specified time limits.
Key provisions
- New house must be purchased within 1 year before or 2 years after the date of transfer
- If constructing: must complete within 3 years from date of transfer
- Exemption capped at ₹10 crore (introduced from April 1, 2023)
- Gain deposited in Capital Gains Account Scheme (CGAS) before ITR filing deadline protects exemption
- New house must not be sold within 3 years of purchase/construction
- Available for ONE residential house only per transfer (Section 54F covers non-house assets)
FAQs
Your LTCG = ₹1.5 crore − indexed cost of ₹30 lakh. If you reinvest the gain amount (not the full sale price) in a new residential house within 2 years, the LTCG is fully exempt under Section 54. Tax is only payable on the portion of gain not reinvested.
Use via API
GET/v1/tax-law/sections/by-2025-ref/114
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REQUEST · cURL
curl https://api.thynktax.com/v1/tax-law/sections/by-2025-ref/114
RESPONSE · 200 OK
{
"act_2025_ref": "114",
"old_reference": "Section 54, Income Tax Act 1961",
"title": "Section 54 - Capital Gains Exemption on Sale of Residential House",
"category": "Capital Gains Exemption",
"limit_or_rate": "Up to LTCG amount (one house) - max ₹10 crore from FY 2023-24",
"applicable_to": "Individual, HUF",
"effective_from": "2026-04-01"
}