Follow Section 82 to save tax from property sale
From April 1, 2026, Tax Year 2026-2027 has started and this means the Income Tax Act, 2025 is applicable and this means you need to familiarise yourself with the newly renumbered Sections to keep your financial plans on track. Previously, under the Income Tax Act, 1961, Section 54 was a well-known term especially for those involved in buying or selling property.
The reason is Section 54 allows you to claim an income tax exemption on the selling a property if you reinvested the long term capital gains from the old property to buy a a new residential property in India.
Section 54 is now renumbered as Section 82 of the Income Tax Act, 2025.
According to Chartered Accountant Suresh Surana, under Section 82 of the Income-tax Act, 2025, if you have got long term capital gains (LTCG) from selling a residential property then you can claim a tax exemption on it if you reivest the LTCG to buy another residential house property. But for getting this tax exemption the house needs to be in India and you need to follow certain other conditions too. The conditions are:
- It applies where an individual or HUF earns long-term capital gains from the sale of a residential house property (i.e., a building or land appurtenant thereto, chargeable under the head Income from house property).
- To claim exemption, the taxpayer must reinvest the capital gains in a new residential house property situated in India, within the prescribed timelines:
- Purchase of a new house property within one year before or two years after the date of transfer or
- Construction of a new house property within three years from the date of transfer.
It is also important to note that the exemption is limited to the cost of the new asset. If the capital gains exceed the cost, the excess amount will be taxable. However, if the capital gains are equal to or less than the cost of the new asset, the entire gains shall be exempt.
Also, the benefits under Section 82 are subject to a monetary limit, with the maximum amount of capital gains eligible for exemption capped at Rs 10 crore. Any capital gains exceeding this limit will be taxable according to applicable provisions.
Here’s a table showing the capital gain tax rate:
| Capital asset | Holding period for long-term classification | Short-term capital-gains rate | Long-term capital-gains rate |
| Land or building or both | More than 24 months | Normal slab rate | 12.5% without indexation* |
| Physical gold and jewellery | More than 24 months | Normal slab rate | 12.5% without indexation |
| Digital gold representing underlying physical gold | More than 24 months | Normal slab rate | 12.5% without indexation |
| Gold ETF listed on a recognised stock exchange | More than 12 months | Normal slab rate | 12.5% without indexation |
| Listed equity shares, Equity Oriented Mutual Funds and Units of a Business Trust on which STT is applicable | More than 12 months | 20% under section 111A | 12.5% under section 112A on aggregate gains exceeding Rs. 1.25 lakh |
| Unlisted equity shares | More than 24 months | Normal slab rate | 12.5% without indexation |
| Specified mutual fund units acquired on or after 1 April 2023 | Not applicable; gains always qualify as short-term under section 50AA | Normal slab rate, irrespective of holding period | Not applicable |
| Debt mutual fund units acquired before 1 April 2023 | More than 12 months if listed; more than 24 months if unlisted | Normal slab rate | 12.5% without indexation |
| Other mutual funds that do not qualify as equity-oriented or specified debt funds | More than 12 months if listed; more than 24 months if unlisted | Normal slab rate | 12.5% without indexation |
| Listed bonds and debentures | More than 12 months | Normal slab rate | 12.5% without indexation |
| Unlisted bonds and debentures | Not applicable; gains always qualify as short-term under section 50AA | Normal slab rate, irrespective of holding period | Not applicable |
| Market-linked debentures | Not applicable; gains always qualify as short-term under section 50AA | Normal slab rate, irrespective of holding period | Not applicable |
Source: CA Suresh Surana
Surana says that Section 82 of the Income Tax Act, 2025 highlights certain important points that are relevant from a tax planning and compliance standpoint. Some of the key points are outlined below –
- One time option to invest in two residential houses: You have the option to buy two residential house properties while reinvesting the LTCG from the sale but only if the LTCG does not exceed Rs 2 crore. This is once in a lifetime option.
- Lock-in period and withdrawal of exemption: If you want to keep the LTCG tax exemption then you can’t sell the new residential house property within three years of purchasing it. If you sell it then you lose the LTCG tax exemption.
- Capital Gains Account Scheme (CGAS): For any reason if you can’t immediately purchase a new residential property before the ITR filing due date, then deposit the LTCG in a special bank account called Capital Gains Account Scheme (CGAS) bank account.
Surana says: “Any unutilised amount after the expiry of 3 years becomes taxable in the year in which such period lapses.”
