Selling a Property or Asset? Know These Capital Gains Tax Exemptions:

Learn the key capital gains tax exemptions available under the Income Tax Act to legally reduce your tax liability on the sale of property and other long-term capital assets.

7 Capital Gains Tax Exemptions Every Taxpayer Should Know

Khush Trivedi

Jul 14, 2026

Last update on Jul 13, 2026

Have you sold any capital asset during the financial year & having huge Capital gain? Then the following available exemptions can help you to reduce your tax liabilities.

EXEMPTIONS UNDER CAPITAL GAIN

1. Section 54: Sale of a Residential House Property

Applies where an individual or HUF sells a long-term residential house and reinvests in another residential house

Asset Transferred	Residential house property (or land appurtenant thereto), being a long-term capital asset (held > 24 months)
Eligible Assessee	Individual/HUF only
Asset to be Acquired	Purchase or construction of one residential house in India. (If LTCG is upto 2CR, then TWO HP can be acquired once in a lifetime)
Time Limit	Purchase: 1 year before to 2 years after transfer. Construction: within 3 years after transfer
Exemption Amount	Lower of Capital Gain or cost of new house; overall investment cap of ₹10 crore (w.e.f. FY 2023-24)
Lock-in Period	A 3-year-old house cannot be transferred within 3 years without reversing the exemption
CGAS Applicable?	Yes, the unutilised amount must be deposited before the ITR due date u/s 139(1)

2. Section 54B: Transfer of Urban Agricultural Land

Provides relief where agricultural land used by the assessee or their parents for agri Purpose during last 2 years of transfer.

Asset Transferred	Agricultural land (urban), used for agricultural purposes by the assessee or a parent in the 2 years immediately preceding transfer
Eligible Assessee	Individual/HUF
Qualifying Reinvestment	Purchase of another agricultural land (urban or rural)
Time Limit	Within 2 years after the date of transfer
Exemption Amount	Lower of the capital gain or the cost of new agricultural land
Lock-in Period	3 years from the date of purchase
CGAS Applicable?	Yes

Section 10(37): Compulsory Acquisition of Urban Agricultural Land

If an Assessee’s Urban Agricultural land has been compulsorily acquired by the Govt, which has been used for agri purpose last 2 years of transfer by the Assessee or his parents, then the entire capital gain, including compensation and enhanced compensation, is fully exempt, with no cap

3. Section 54D: Compulsory Acquisition of Industrial Undertaking Land/Building

Applies specifically where land or a building forming part of an industrial undertaking is compulsorily acquired by the Government, and the compensation is reinvested to re-establish the undertaking.

Asset Transferred	Land or building (or any right therein) forming part of an industrial undertaking, compulsorily acquired
Eligible Assessee	Any assessee
Qualifying Reinvestment	Purchase of land/building, or construction of a building, for shifting or re-establishing the undertaking
Time Limit	Within 3 years from the date of receipt of compensation
Exemption Amount	Lower of the capital gain or the cost of the new asset
Lock-in Period	3 years
CGAS Applicable?	Yes

4. Section 54EC: Investment in Specified Bonds (NHAI/RECL/PFCL/IRFCL/HUDCO/IREDA)

Simple Investment in notified bonds to exempt your LTCG

Asset Transferred	Land or building (or both): long-term capital gain
Eligible Assessee	Any assesse
Qualifying Reinvestment	Specified/notified bonds: NHAI, RECL, PFCL, IRFCL, HUDCO, IREDA
Time Limit	Within 6 months from the date of transfer
Exemption Amount	Lower of Capital Gain or investment; capped at ₹50 lakh per financial year (effectively ₹50 lakh even if spread across two FYs for one transfer)
Lock-in Period	5 years
CGAS Applicable?	No: investment must be made directly in the bonds; there is no CGAS deposit route for this section

5. Section 54F: Sale of Any Long-Term Asset Other Than a Residential House

Applies to Assessees selling assets other than a residential house, such as shares, land, gold, etc., & reinvest in a Residential house.

Asset Transferred	Any long-term capital asset other than a residential house
Eligible Assessee	Individual / HUF
Qualifying Reinvestment	Purchase or construction of one residential house in India
Time Limit	Purchase: 1 year before to 2 years after transfer. Construction: within 3 years after transfer
Exemption Amount	Proportionate: (Net Consideration invested ÷ Net Consideration) × Capital Gain (overall investment cap ₹10 crore)
Lock-in Period	3 years
CGAS Applicable?	Yes

6. Section 54G: Shifting of Industrial Undertaking from Urban Area

Covers capital gains on plant, machinery, land or building used for an industrial undertaking that is being shifted out of an urban area.

Asset Transferred	Plant, machinery, land or building used for an industrial undertaking situated in an urban area to rural area
Eligible Assessee	Any assessee
Qualifying Reinvestment	Purchase of new plant/machinery, land/building, and shifting-related expenses
Time Limit	1 year before to 3 years after the date of transfer
Exemption Amount	Lower of Capital Gain or cost/expenditure incurred
Lock-in Period	3 years
CGAS Applicable?	Yes