TaxSavvy

ITR

Sec 54F exemption when selling shares to buy a house

Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.

Find

Sec 54F exempts long term gain on assets other than a house if the net sale value is invested in a residential house in India. You must not own more than one house, other than the new one, on the date of sale. If only part of the sale value is invested, the exemption is proportionate.

Provisions

Sec 54F (now Sec 86); Sec 112A (now Sec 198)

Analysis

If you sold shares for ₹50 lakh with a gain of ₹20 lakh and invested ₹40 lakh in the flat, the exemption is ₹20 lakh × 40/50 = ₹16 lakh under Sec 54F (now Sec 86). The remaining ₹4 lakh is taxed under Sec 112A after the ₹1,25,000 exemption. The ₹10 crore cap applies. Selling the new house within 3 years reverses the benefit.

Close

  1. Confirm you own at most one other house on the sale date.
  2. Compute net sale value and amount invested.
  3. Calculate the proportionate exemption.
  4. Claim it in Schedule CG with property details.

Connect now

A Savvy replies in minutes.

Fixed price before you pay. Your Savvy is paid only after you accept the work.

Connect nowPay and start: Income tax return with capital gains, ITR-2, ₹2,499

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.

People also ask