income tax
Published on 18 August 2025
Capital Gains Exemptions for FY 2024-25 (AY 2025-26)
Capital Gains Exemptions for FY 2024-25 (AY 2025-26): Key Sections You Need to Know
For FY 2024-25, individual taxpayers, HUFs, and businesses can claim exemptions on capital gains under various sections of the Income Tax Act. The benefit depends on the nature of the asset sold, the reinvestment made, and compliance with timelines.
Section-wise Exemptions Overview
| Section | Applicable To | Asset Transferred | New Asset Required | Time Frame / Conditions | Maximum Exemption |
|---|---|---|---|---|---|
| 54 | Individual / HUF | Residential house (LTCG) | One residential house in India | Purchase: 1 yr before / 2 yrs after; Construction: 3 yrs | Lower of LTCG or investment, capped at ₹10 crore |
| 54B | Individual / HUF | Agricultural land | Agricultural land | Land must be used by assessee/parents for ≥2 yrs; reinvest within 2 yrs | Lower of capital gain or investment |
| 54D | Any assessee | Compulsorily acquired land/building | Industrial land/building | Reinvest within 3 yrs to re-establish undertaking | Lower of capital gain or investment |
| 54EC | Any assessee | Land or building (LTCG) | Specified bonds (NHAI/REC, etc.) | Invest within 6 months; lock-in 5 yrs | Up to ₹50 lakh per FY |
| 54EE | Any assessee | Any long-term asset | Units of specified fund | Invest within 6 months; lock-in 3 yrs | Up to ₹50 lakh |
| 54F | Individual / HUF | Any LTCG (except house) | One residential house in India | Assessee must not own >1 house; proportional relief if partial reinvestment; cap ₹10 crore | As per prescribed formula |
| 54G | Any assessee | Urban business assets | Rural business assets | Reinvest 1 yr before / 3 yrs after transfer | Lower of capital gain or investment |
| 54GA | Any assessee | Urban assets shifted to SEZ | SEZ business assets | Acquire within 1 yr before / 3 yrs after | Lower of capital gain or investment |
| 54GB | Individual / HUF | Residential property (LTCG) | Equity in eligible company/startup | Invest before ITR due date; company to invest within 1 yr | Proportional exemption |
Key Updates for FY 2024-25
- ₹10 crore exemption cap now applies to both Section 54 (house property) and Section 54F (non-house assets).
- 54EC & 54EE: Maximum eligible investment stays at ₹50 lakh per financial year.
- Time-bound compliance critical: Missing deadlines (e.g., not depositing unutilised gains in a Capital Gains Account Scheme before ITR filing) can result in disallowance.
- Asset eligibility rules tightened: For example, agricultural land must be personally used for farming (by assessee/parents), and startups must qualify under government definitions for 54GB.
Frequently Asked Questions
Q1. Can I claim exemption under Section 54 by investing in two houses? No. From AY 2024-25, exemption is restricted to one residential house in India, subject to the ₹10 crore ceiling.
Q2. How long do I have to invest in REC/NHAI bonds under Section 54EC? You must invest within 6 months of the asset transfer, with a maximum limit of ₹50 lakh per year.
Q3. Does Section 54B apply if the agricultural land was not used for farming? No. The land must have been in agricultural use by you or your parents for at least two years prior to sale.
Q4. What assets qualify for exemption under Section 54F? Any long-term capital asset other than a house. But to claim exemption, you must not already own more than one residential house on the date of transfer.
Tip for taxpayers: Always keep investment proofs, registration papers, and CA certificates handy for scrutiny. Given the tighter caps and timelines, plan reinvestments at least 30–60 days before the ITR deadline.