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ArticleWhen you sell a long-term asset, three sections let you avoid capital-gains tax by reinvesting the proceeds. Knowing which one fits your situation can save a large tax bill. Here's how 54, 54EC and 54F work. Exact rates and limits are confirmed for your case.
Reviewed by CA Harika Chebolu, FCA · Last updated 2026-06-13
Quick answer
Reinvest long-term gains in a house (54), in bonds (54EC, capped at Rs 50 lakh), or a house from any asset (54F) to save tax. Here's how each works.
Section 54 exempts the long-term gain on selling a residential house if you reinvest it in another residential house, within the prescribed time limits (broadly, buy within the allowed period before or after the sale, or build within the allowed window). It's the core relief for upgrading or changing homes.
Section 54EC lets you exempt long-term gains (from land or building) by investing in specified capital-gains bonds within six months of the sale, subject to a cap of Rs 50 lakh, with the bonds locked in for a set period. It suits those who don't want to buy another property.
Section 54F exempts the long-term gain on selling any long-term asset (other than a house) — such as shares, gold or a plot — if you invest the net sale consideration in a residential house, subject to conditions including owning limited other property. The exemption is proportionate if you reinvest only part.
If you can't complete the reinvestment before your return's due date, deposit the amount in the Capital Gains Account Scheme to preserve the exemption while you buy or build within the allowed window. Missing this step is a common way exemptions are lost.
The right section depends on what you sold and what you'll buy: 54 for house-to-house, 54F for any-asset-to-house, and 54EC for parking land/building gains in bonds. They can sometimes be combined within the rules — plan the reinvestment before you sell.
Section 54 is for selling a residential house and buying another; 54F is for selling any other long-term asset and buying a house. 54F requires investing the net sale consideration and has conditions on owning other property.
Investment in specified capital-gains bonds is capped at Rs 50 lakh , within six months of the sale, with the bonds locked in for a set period. It exempts long-term gains from land or building.
Deposit the amount in the Capital Gains Account Scheme by the due date to preserve the exemption while you complete the purchase or construction within the allowed window.
Selling a long-term asset? Write to the firm before you sign — the right exemption and timing can save the whole tax.