Section 82 of the Income-tax Act, 2025 — Capital Gains Exemption on Sale of Residential House (old Section 54)

In plain language

What Section 82 means

Section 82 of the Income-tax Act, 2025 is the re-numbered and re-written version of the old and very popular Section 54 of the Income-tax Act, 1961. It gives you an exemption from long-term capital gains (LTCG) tax when you sell a residential house (a house or land appurtenant to it) and re-invest the gain into buying or constructing another residential house in India. In simple words: if you sell your old home at a profit and put that profit into a new home, the government lets you skip tax on that profit — subject to conditions.

Who can claim it

• Only Individuals and Hindu Undivided Families (HUFs) can claim Section 82. Companies, LLPs, firms and other entities cannot.
• The asset sold must be a residential house that is a long-term capital asset — i.e. held for more than 24 months before sale.
• The income from the old house should be chargeable under the head "Income from house property" (it must genuinely be residential, not commercial).

Key conditions and limits

• Buy a new house within 1 year before or 2 years after the date of sale, OR construct a new house within 3 years from the date of sale.
• The new house must be located in India. A property purchased abroad does not qualify.
• The exemption is the lower of (a) the capital gain, or (b) the amount invested in the new house.
• ₹10 crore ceiling: the cost of the new house considered for exemption is capped at ₹10 crore. Any investment above ₹10 crore is ignored for exemption. This cap (introduced by Budget 2023 and carried into the 2025 Act) protects the relief for genuine home-buyers.
• Two-house option: if the capital gain does not exceed ₹2 crore, you may invest in two residential houses instead of one. This choice is a once-in-a-lifetime option — you cannot use it again.
• Capital Gains Account Scheme (CGAS): if you have not re-invested the amount before the due date of filing your Income-tax Return, you must deposit the unutilised amount in a CGAS account with a notified bank. That deposited money must then be used within the time limits, or it becomes taxable.

The 3-year lock-in (claw-back)

Do not sell the new house within 3 years. If the new residential house is transferred within 3 years of its purchase or construction, the exemption you claimed earlier is reversed — the cost of the new house is reduced by the exempted gain, which effectively brings the earlier exemption back to tax when you sell the new house.

How it interacts with other sections

• Section 82 vs the old-54F equivalent: Section 82 is for selling a house and buying a house. If you sell any other long-term asset (shares, gold, plot) and buy a house, the separate 54F-type provision applies instead.
• Capital gains are first computed under the capital-gains machinery (indexation and cost rules of the 2025 Act) and Section 82 then exempts part or all of the gain.
• It works alongside Section 54EC-type bond re-investment — you can, in principle, split re-investment between a new house (Section 82) and specified bonds for the balance.

Practical implications

Section 82 is one of the most valuable reliefs for ordinary homeowners upgrading or relocating. The essentials to protect your claim are: hold the old house 24 months+, act within the 1/2/3-year windows, keep proof of the sale deed and purchase/construction cost, park unused money in CGAS before the ITR due date, and never sell the new home inside 3 years. Getting any one of these wrong can cost you the entire exemption.