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Tax planning

Sec 86 (old 54F) exemption for gains on assets other than a house

  • If you sell shares, land, gold or any non-house asset held long term and use the sale money to buy one house, the gain is exempt in proportion to what you invest.
  • Deadline: New house bought 1 year before or 2 years after the transfer, or built within 3 years. Unused net consideration deposited in CGAS before the return due date (AY 2026-27: 31 July 2026 for ITR-2).
  • Done in 2 working days after sale papers and new house documents
  • Prepared by your Savvy, checked by a CA
  1. Sale documents of the original asset
  2. How many residential houses do you
  3. Confirm eligibility
  4. Sec 86 (old 54F) eligibility note and exemption working
The law and the stepsPay and start · ₹2,999Per event, + 18% GST

Answer in brief

If you sell shares, land, gold or any non-house asset held long term and use the sale money to buy one house, the gain is exempt in proportion to what you invest. You must not own more than one other house on the date of sale. We check eligibility, compute the exempt share, guide the CGAS deposit and file the claim.

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From the official sources

What the law says, and what trips people up

From the official portal's manuals and FAQs, with the source for each point.

The law

  • Income-tax Act 1961, Sec 54F(1) (now Sec 86)

    Individual or HUF; long-term asset other than a residential house; buy one house in India 1 year before or 2 years after, or build within 3 years; if full net consideration is invested, entire gain exempt; otherwise exemption = gain x amount invested / net considerationSource

  • Income-tax Act 1961, Sec 54F(1) (now Sec 86) proviso (house count)

    No exemption if on the date of transfer the assessee owns more than one residential house other than the new one, or buys another within 2 years or builds another within 3 years (where its income is under 'house property')Source

  • Income-tax Act 1961, Sec 54F (now Sec 86; ₹10 crore cap, from AY 2024-25)

    Investment above ₹10 crore is ignored in the formulaSource

  • Income-tax Act 1961, Sec 54F(3) (now Sec 86) and the second-house rule

    Exempted gain becomes taxable as long-term gain if the new house is sold within 3 years, or if a second house is bought or built within the windowsSource

  • Income-tax Act 1961, Sec 54F(4) (now Sec 86)

    Net consideration not used before the return is filed must be deposited under the Capital Gains Accounts Scheme before filing, with proofSource

  • Income-tax Act 2025, Sec 86

    From tax year 2026-27: same relief, same house-count bar, ₹10 crore cap and 3-year clawback; deposit before the return under Sec 263Source

  • Income-tax Act 1961 to 2025 mapping

    Old Sec 54F corresponds to new Sec 86Source

  • Income-tax Act 2025, Sec 536 (transition)

    Practitioner reading: if a house claimed under old Sec 54F is sold in FY 2026-27, the withdrawn exemption is taxed under the 2025 Act in that yearSource

  • Government fee

    No government fee. Tax on the non-exempt part of the gain at the rate for that asset (12.5% long term for most assets from 23 July 2024; Sec 198 (old Sec 112A) rate for listed equity). Source: https://incometaxindia.gov.in/Tutorials/15-%20LTCG.pdf

  • Late fee or penalty

    Exemption on any unused amount is at risk if CGAS deposit is missed before the due date. Source: https://bcajonline.org/journal/capital-gains-account-scheme-due-date-for-deposit/ . Late return fee under Sec 428 (old Sec 234F). Source: https://www.incometaxindia.gov.in/w/section-234f

On the portal

  1. e-File > Income Tax Returns > File Income Tax Return > AY 2026-27 > ITR-2
  2. Enter the original asset's gain in Schedule CG (or Schedule 112A for listed equity)
  3. In Schedule CG, open the deductions table and select Sec 54F; enter cost of new house, date, and CGAS amount and account details
  4. Check that the exemption is applied against the right asset's long-term gain
  5. Pay any balance and e-verify

What trips people up

  • Seller already owns two flats and sells land planning to claim 54F

    Relief is barred if more than one other house is owned on the transfer date; review ownership before the sale dateSource

  • Only the gain reinvested, expecting full exemption as in Sec 54

    54F needs the net sale consideration; partial investment gives partial reliefSource

  • CGAS deposit missed; house bought before a belated return

    Deposit before the Sec 139(1) due date; Delhi and Bangalore tribunals have differedSource

  • Conflicting advice on when a second 54F claim can be made

    Check the 3-year sale lock-in and the house count afresh for each transferSource

People ask

Can I claim 54F on equity mutual fund or share gains?

Yes. Any long-term asset other than a residential house qualifies, including shares and funds.Source

I own one flat already. Can I still claim?

Yes. The bar is owning more than one residential house other than the new one on the date of transfer.Source

Does a house bought within one year before the sale count as the 'other' house?

The tutorial excludes a house bought within one year before the transfer (the new house) from the count.Source

What is the cap?

Investment above ₹10 crore is ignored from AY 2024-25.Source

IDFD

How we solve it: 4 steps

Every line tracked live.

Step 1 of 4 · What we need from you

Tap each one you already have

Ready0 / 6
  • Sale documents of the original asset
  • Gain computation for that asset
  • List of houses owned on sale date
  • New house agreement and payment proofs
  • CGAS deposit receiptOptional
  • Home loan sanction, if usedOptional

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₹2,999 + ₹539.82 GST = ₹3,538.82

Per event. Delivered in 2 working days after sale papers and new house documents. Due: New house bought 1 year before or 2 years after the transfer, or built within 3 years. Unused net consideration deposited in CGAS before the return due date (AY 2026-27: 31 July 2026 for ITR-2).

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