Answer

ITR

Saving tax on a property sale with 54EC bonds

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  1. Facts

    Long term gain on land or building is exempt under Sec 54EC if invested in specified bonds within 6 months of the sale. The limit is ₹50 lakh in a financial year. The bonds have a 5 year lock-in.

  2. Provisions and law

    • Sec 54EC (now Sec 85)Long-term gain on land or building is exempt if invested in specified bonds within 6 months, up to ₹50 lakh

  3. Analysis

    If you sold land in November 2025 with a ₹45 lakh gain, investing ₹45 lakh in eligible bonds by May 2026 makes the gain fully exempt under Sec 54EC (now Sec 85). Interest on the bonds is taxable each year. Gains on shares or mutual funds do not qualify for 54EC. If the bonds are transferred or pledged within 5 years, the exemption is withdrawn.

  4. Conclusion

    1. Confirm the gain is long term and from land or building.
    2. Invest in eligible bonds within 6 months of sale.
    3. Keep the allotment letter.
    4. Claim the exemption in Schedule CG.

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