When you sell a capital asset and earn a long-term capital gain (LTCG), the Income Tax Act offers several exemption options to save tax, provided you reinvest the proceeds in specified assets. Let’s explore the main sections (54 to 54G) that provide relief.

✅ Section 54 & 54F – For Individuals & HUFs

Section 54: Sale of a residential house, reinvest in another residential house in India.

Section 54F: Sale of any other capital asset, reinvest in one residential house.

Reinvestment allowed 1 year before or 2 years after sale (3 years for construction).

Lock-in: New house must not be sold within 3 years.

Use of Capital Gain Account Scheme (CGAS) allowed if reinvestment is delayed.

🌾 Section 54B – Agricultural Land

Applicable if land used for agriculture (by self or parents) for 2 years before sale.

Reinvest in new agricultural land within 2 years.

Exemption gets revoked if new land sold within 3 years.

🏢 Section 54EC & 54EE – Investment in Bonds

Invest LTCG in specified bonds (NHAI, REC, etc.) within 6 months.

Max cap: ₹50 lakhs in a financial year.

Lock-in: 3 years (5 years for some bonds).

Exemption withdrawn if bonds sold prematurely.

🏭 Section 54D, 54G, 54GA – For Industrial Undertakings

Applies when land/building/plant used in business is sold (often due to compulsory acquisition or relocation).

Reinvest in industrial assets, land/buildings/machinery in non-urban areas or SEZ.

Must reinvest within 3 years and retain assets for at least 3 years.

💼 Section 54GB – Invest in Eligible Startups

Sale of residential property can be reinvested in equity shares of a startup.

Company must use funds to buy new plant/machinery.

Assessee must hold over 50% shares, and assets must not be sold within 5 years.

⚖️ Practical Insights & Case Laws

House need not be self-occupied, and purchase in spouse/child’s name may still qualify.

Construction can start before the sale.

Death of the assessee before using CGAS does not lead to taxation of unutilized amount.