Sold your house property or land? These nine sections in Income Tax law can help save capital gains tax

You can save a significant amount of capital gains tax and even at times pay zero tax when selling any house property- both be it industrial and residential or any kind of land, both agricultural and non-agricultural. There are nine sections under the Income Tax Act, 1961 that let you pay either zero or reduce capital gains tax when selling certain assets like houses, land, machinery, and more. While it’s true that most individual taxpayers rely on Section 54 and 54F to pay little or no capital gains tax when selling residential house or land, there are other Sections available too.

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Keep reading to find out more about how to save on capital gains tax from sale of house or land.

What are the various Sections using which you can save capital gains tax on sale of assets

According to Income Tax Department brochure, here are the Sections:

1. Section 54: Exemption from the capital gains arising from the transfer of residential house property and investment in new house property.
2. Section 54B: Exemption from the capital gains arising from transferring land used for agricultural purposes and investing in new agricultural land.
3. Section 54D: Exemption from the capital gains arising from the compulsory acquisition of land and building, forming part of the industrial undertaking and investing in land or building for setting up or shifting of the industrial undertaking.
4. Section 54EC: Exemption from the capital gains arising from the transfer of land or building or both and investing in specified bonds
5. Section 54EE: Exemption from the capital gains arising from the transfer of any long-term capital asset and investing in specified assets
6. Section 54F: Exemption from the capital gains arising from the transfer of a long-term capital asset other than a house property and investing in a residential house property
7. Section 54G: Exemption from the capital gains arising from the transfer of assets on shifting of industrial undertaking from the urban area to a non-urban area.
8. Section 54GA: Exemption from the capital gains arising from the transfer of assets on shifting of industrial undertaking from the urban area to any SEZ
9. Section 54GB: Exemption from the capital gains arising from the transfer of residential property and investing in eligible companies or eligible start-ups.

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Table showing the various exemptions under Section 54 and 54F available for capital gains tax exemption:

Particulars	Section 54	Section 54F
Eligible Assessee	Individuals and Hindu Undivided Family (HUFs)	Individuals and Hindu Undivided Family (HUFs)
Qualifying Asset	Residential House Property	Any Capital Asset other than residential property
Nature of Capital Gains	Long term capital gains (LTCG)	Long term capital gains (LTCG)
Investment in new property	Residential house property in India	Residential house property located in India
Maximum amount of exemption allowed	Lower of Amount of long term capital gains or Amount invested in new property and deposited in capital gain account scheme.	If net consideration is invested in new house property the entire capital gain will be exempted from taxation. If partial consideration is invested in new house property the exemption will be granted in proportion to the amount invested
Time limit for making investment in new property	Purchase: 1 year before or 2 years after the date of transfer. Construction: Within three years from the date of transfer.	Purchase: 1 year before or 2 years after the date of transfer. Construction: Within three years from the date of transfer.
Time limit to deposit in capital gains account scheme (CGAS)	On or before the due date of filing the ITR	On or before the due date of filing the ITR
Withdrawal of the tax exemption	Amount deposited in CGAS not utilised in the prescribed time; Transfer of new house within three years	Amount deposited in CGAS not utilised in the prescribed time; Transfer of new house within three years

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Table showing the various exemptions under Section 54B, 54D and 54EC available for capital gains tax exemption

Particulars	Section 54B	Section 54D	Section 54EC
Eligible Assessee	Individuals and Hindu Undivided Family (HUFs)	Any assessee	Any assessee
Qualifying Asset	Agricultural land	Land or building forming part of an industrial undertaking transferred by way of compulsory acquisition.	Land or building or both.
Nature of Capital Gains	Long or short term capital gains (LTCG/STCG)	Long or short term capital gains (LTCG/STCG)	Long term capital gains (LTCG)
Investment in new property	Agricultural land	Land or building for the purposes of shifting or re-establishing the undertaking or setting up another industrial undertaking	National Highway Authorities of India (NHAI) Bonds Rural Electrification Corporation of India (REC) Any other bonds notified by the Central Government.
Maximum amount of exemption allowed	Lower of: Amount of capital gains or Amount invested in new agricultural land including the amount deposited in Capital Gains Account Scheme	Lower of: Amount of capital gains or Amount invested in new land or building including the amount deposited in Capital Gains Account Scheme
Time limit for making investment in new property	Within two years after the date of transfer of original asset	Within a period of three years after the date of compulsory acquisition	Within six months of the transfer of the land, building or both.
Time limit to deposit in capital gains account scheme (CGAS)	On or before the due date of filing the ITR	On or before the due date of filing the ITR	On or before the due date of filing the ITR
Withdrawal of the tax exemption	Amount deposited in CGAS not utilised in the prescribed time Transfer of new agricultural land within three years	Amount deposited in CGAS not utilised in the prescribed time; Transfer of new land or building within three years	Transfer of bonds within five years or Conversion of bonds within five years

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Table showing the various exemptions under Section 54EE, 54G and 54GB available for capital gains tax exemption

Particulars	Section 54EE	Section 54G	Section 54GB
Eligible Assessee	Any assessee	Any assessee	Individuals and Hindu Undivided Family (HUF)
Qualifying Asset	Any capital asset	Plant, machinery, land or building or any right in land or building used for the purpose of an industrial undertaking situated in an urban area	Residential property (i.e. a house or a plot of land)
Nature of Capital Gains	Long term capital gains (LTCG)	Long or short term capital gains (LTCG/STCG)	Long or short term capital gains (LTCG/STCG)
Investment in new property	Units of notified fund	New plant or machinery purchase or construct a building or shift the original asset to a non-urban area.	Equity shares of an eligible company or eligible start-up. However, the eligible company must buy a new asset within one year after the date of subscription of shares.
Maximum amount of exemption allowed	Lower of: Amount of long term capital gains Amount invested in specified assets or Rs 50 lakh	Lower of: Amount of capital gains, or Aggregate of amount invested in new assets, expenses on transfer or establishment and amount deposited in capital gain account scheme (CGAS)	Amount of capital gains.
Time limit for making investment in new property	Within six months of the transfer of the long term capital asset	Within one year before or three years after the date of transfer	Before the due date of ITR filing
Time limit to deposit in capital gains account scheme (CGAS)	-	On or before the due date of ITR filing	-
Withdrawal of the tax exemption	Transfer of new asset within 3 years or Conversion of bonds within 5 years	Amount deposited in CGAS not utilised in the prescribed time Transfer of new asset within three years	Share of eligible company sold by the assessee New asset sold by the eligible company, Amount deposited in CGAS not utilised in the prescribed time

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