/ INCOME TAX

Overview on Capital Gain Exemption for FY 2024-25/AY 2025-26

capital Gain exemption

Capital Gains Exemptions—Financial Year 2024-25/ Assessment Year 2025-26

Here is a summary of various exemptions available under the Income Tax Act in respect of capital gains for FY 2024-25/AY 2025-26:

Section Eligible Assessee Asset Transferred New Asset to be Acquired Conditions & Time Limit Max. Exemption
54 Individual / HUF Residential House (Long-Term Capital Asset) One Residential House in India Purchase: within 1 year before or 2 years after transfer / Construction: within 3 years Amount of capital gain or investment, whichever is lower
54B Individual / HUF Agricultural Land (used by assessee or parents for at least 2 years before transfer) Agricultural Land (to be used for agricultural purpose) Purchase within 2 years from date of transfer Capital gain or amount invested, whichever is lower
54D Any Assessee Compulsory Acquisition of land/building forming part of industrial undertaking Land or building for shifting/reestablishing the undertaking Acquisition within 3 years from date of transfer Capital gain or amount invested, whichever is lower
54EC Any Assessee Long-Term Capital Asset being Land or Building or both Investment in NHAI / REC / other specified bonds Within 6 months of transfer; bonds redeemable after 5 years ₹50 lakh (aggregate limit in a financial year)
54EE Any Assessee Long-Term Capital Asset Investment in specified funds notified by CG Within 6 months; lock-in period of 3 years ₹50 lakh
54F Individual / HUF Any LTCA other than residential house One Residential House in India No more than one residential house on date of transfer; full exemption if entire net consideration is invested; proportionate otherwise Capital gain × (Amount invested ÷ Net Consideration)
54G Any Assessee Land, building, plant or machinery in urban area Assets for setting up/re-establishing industrial undertaking in rural area Acquire new asset within 1 year before or 3 years after transfer Capital gain or amount invested, whichever is lower
54GA Any Assessee Capital asset in urban area for shifting undertaking to SEZ New assets in SEZ for the purpose of business Within 1 year before or 3 years after transfer Capital gain or amount invested, whichever is lower
54GB Individual / HUF Long-term capital asset (residential property) Subscription to equity shares of eligible startup/company Before due date of Income tax return filing; company to invest in new assets within 1 year Capital gain or proportionate to investment

  • From Assessment Year 2024-25, exemption u/s 54 & 54F is capped at ₹10 crore (as per the amendments made by Finance Act 2023).

  • Exemptions u/s 54EC still have the aggregate investment limit of INR 50 lakh.

  • Section 54EE has limited application as few funds are notified.

  • For 54GB, the company must qualify as an eligible startup and meet the asset utilization conditions.

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