Capital Gain Exemptions

Exemption Under Section 54

Exemption Under Section 54

When an individual sells a residential property and buys another residential property, he will be eligible for exemption under Section 54.


  1. The taxpayer (i.e. seller) needs to be an individual or HUF.
  2. Firms, LLP’s and companies cannot utilize the benefits of this section.
  3. Assets Sold should be long term means assets should be in the possession for more than 24 month.
  4. New Assets should be purchased within 1 year or 2 year after transfer or construction within 3 years after transfer.
  5. New Purchased Asset should be residential house.


  1. If new asset is sold within 3 years, amount earlier exempted under this Section will be reduced from its COA to calculate capital gains thereon.
  2. If the amount in CGAS is not utilized within the prescribed time limit, such unutilized amount will be taxable as capital gains.

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