Section 82 — Profit on Sale of House Property Property Used for Residence (IT Act, 2025)

Equivalent to: Section 54 of the Income Tax Act, 1961 Chapter: IV (Capital Gains) Effective from: 1 April 2026

The exemption on gains from property sale is now available under Section 82, which was previously under Section 54 of the old IT Act, 1961. The rules remain the same — only the numbering has changed.

 Who Can Claim?

Section 82 applies to an Individual or Hindu Undivided Family (HUF) that has long-term capital gains arising from the transfer of a capital asset — being buildings or lands appurtenant thereto — being a residential house, the income of which is chargeable under the head "Income from House Property" (the original asset).

 Time Limits for Reinvestment

The exemption is available if the assessee:

• Purchases a new residential house in India within 1 year before or 2 years after the date of transfer of the original asset, or
• Constructs a new residential house within 3 years after the date of transfer.

 How the Exemption is Computed

If the capital gains exceeds the cost of the new asset → the excess is charged to tax under Section 67, and the cost of the new asset for future computation is taken as nil.

If the capital gains is equal to or less than the cost of the new asset → no capital gains tax is charged, and the cost of the new asset for future computation is reduced by the amount of capital gains.

 Capital Gains Account Scheme (CGAS) — Deposit Mechanism

If the capital gains are not used to purchase the new asset within 1 year before the date of transfer, or are not utilised before filing the return of income under Section 263, then:

• The unutilised amount must be deposited in a specified bank or institution under a scheme notified by the Central Government (Capital Gains Account Scheme).
• The deposit must be made before filing the return and not later than the due date for filing under Section 263(1).
• Proof of deposit must be submitted along with the return.

 Consequences of Non-Utilisation

If the deposited amount is not fully utilised within the prescribed period:

• The unutilised amount is charged to tax under Section 67 as income of the tax year in which the 3-year period from the date of original asset transfer expires.
• The assessee is entitled to withdraw such unutilised amount per the scheme.

 Special Provision — Two Houses (Sub-section 5)

This is a significant benefit introduced for smaller capital gains:

If the capital gains under sub-section (1) does not exceed ₹2 crore, the assessee may, at his option, purchase or construct two residential houses in India. Where such option is exercised:

• "One residential house in India" shall be read as "two residential houses in India" for the purpose of exemption.
• The term "new asset" shall mean two residential houses in India.

Important restriction: If during any tax year the assessee has exercised this option, he shall not be entitled to exercise such option for the same tax year or any other tax year.

 Monetary Cap (₹10 Crore Limit)

If the cost of the new asset exceeds ₹10 crore, the amount exceeding ₹10 crore shall not be taken into account for computing the exemption.

 Summary Table