EaseValueSelling an asset at a profit gives you a tax bill and a deadline, and most people discover both in the same conversation. What far fewer people are told is that the Income-tax Act, 2025 offers not one shelter but three separate routes, that they ask for very different amounts of money, and that choosing between them on instinct is an expensive way to decide. Section 82 (the old Section 54) lets someone who has sold a residential house reinvest the gain in another one. Section 86 (the old Section 54F) lets someone who has sold anything else — a plot, a commercial unit, shares, gold — do something that sounds similar but is not: it requires reinvestment of the entire net consideration, and reinvesting less gives you only a proportionate exemption. Section 85 (the old Section 54EC) offers a third way out through specified bonds, capped, locked in, and available only against a gain on land or a building. This calculator prices all three against your actual figures. It tells you the exact sum each route needs to shelter your gain in full, the tax each rupee of that commitment buys you, and where you stand if you reinvest less than the full amount. It also enforces the rule that quietly destroys more of these exemptions than every technical condition combined: money you intend to reinvest but have not yet spent must be sitting in a Capital Gains Account Scheme deposit by the due date for filing your return, or the exemption on that unspent slice is refused — not deferred, refused — however faithfully you complete the purchase eight months later. On a typical ₹72 lakh gain, that single administrative step is worth over ₹9 lakh.
How it’s calculated
- Start with what you sold, because that one choice decides which routes exist for you. A residential house opens Section 82. Anything that is not a residential house opens Section 86 instead — never both. Land or a building of any kind also opens the Section 85 bond route; shares, gold and jewellery do not.
- Set your residential status. All three exemptions are available to a non-resident. What is not available to a non-resident is the option to compute the gain at 20% with indexation on a property acquired before 23 July 2024 — that grandfathering is resident-only, so an NRI is on the flat rate with no indexation in every case.
- Enter the sale consideration. For immovable property, if the stamp-duty value exceeds the agreed price beyond the tolerance band, the stamp-duty value is substituted and it is the substituted figure the computation runs on. Enter that one, not the price in the deed, or every number below will be understated.
- Enter your expenses of transfer — brokerage, legal fees, stamp duty you bore as seller. This figure works twice: it reduces the gain, and it reduces the net consideration, which is the amount the Section 86 route requires you to reinvest. Under that route, a properly claimed brokerage bill lowers your reinvestment obligation rupee for rupee.
- Enter your cost of acquisition and improvement. For immovable property sold on or after 23 July 2024 this is taken at actual cost with no indexation. If the asset came to you by inheritance or gift, use the previous owner's cost, not its value when you received it.
- Enter the date of sale. Every deadline on the page is computed from it — the bond window, the two-year purchase window, the three-year construction window and the Capital Gains Account Scheme date. For immovable property this is normally the date the conveyance was registered.
- Check the tax rate. It defaults to 12.5%, the rate for long-term gains on immovable property transferred on or after 23 July 2024 and for most other long-term assets. A resident using the 20%-with-indexation grandfathering on an older property should enter 20 and raise the cost figure to the indexed cost — changing one without the other produces a meaningless answer.
- Enter how much you will put into a new residential house, and separately how much of that you have already paid out. The second box is what lets the tool price your Capital Gains Account Scheme exposure, which is the most valuable single output on this page. Enter zero in the first box if you do not intend to buy — you will still be told what it would have been worth.
- Enter how much you will put into bonds, then check the ceiling and lock-in beneath it. The ceiling in force is ₹50,00,000 and the lock-in is five years, but both are notified figures that have been revised before, so both are inputs here rather than hard-coded assertions. Confirm them for your year before relying on the output.
- Confirm the bond investment window. Six months from the date of transfer is the period in force, and it is by a wide margin the tightest deadline on this page — there is no extension and, unlike the house routes, no Capital Gains Account Scheme fallback.
- Answer the ownership question honestly: do you already own more than one other residential house? If you do, and you sold something that is not a house, the Section 86 route is closed to you outright. It is the most commonly missed condition in this whole area, it is tested on the date of transfer, and it cannot be fixed afterwards.
- Enter your other taxable income and whether your return is subject to audit. The first fixes your surcharge rate, so the same gain costs two people different amounts. The second sets the Capital Gains Account Scheme deadline at 31 July or 31 October.
- Read the route table first, before anything else. It shows, for each route open to you, the cash required for a full shelter, the tax that saves, and the tax saved per ₹100 committed. That last column is the number that decides things: on a Section 86 case it is routinely half the bond figure, because most of each rupee you put into the house is doing no exemption work at all.
- Read the deadline block and put every date in your calendar the same day. The bond date comes first and is unforgiving. The Capital Gains Account Scheme date comes second and is the one people miss. The two-year and three-year dates come last and are rarely the problem.
- Read the three coloured boxes in order. The first gives your route verdict and, where Section 86 applies, prices the whole-consideration trap. The second covers the bond ceiling, the lock-in and the fact that bond interest is fully taxable. The third prices your Capital Gains Account Scheme exposure in rupees — if that box is red, deal with it before anything else on this page.
Three routes, and why they are not interchangeable
The Income-tax Act, 2025 does not offer a single capital-gains exemption with variations. It offers three genuinely different provisions, each with its own qualifying asset, its own reinvestment target, its own deadline and its own conditions. Treating them as one flexible relief is how people end up committing several crores to shelter a gain that a much smaller sum would have covered, or — far more often — committing a sum that would have worked under one route and does not under the one that actually applies to them.
Section 82, carrying forward the old Section 54, applies where the asset sold is a long-term residential house. It is the most generous of the three by a distance, because it asks you to reinvest only the capital gain in another residential house. The rest of the sale proceeds are yours, free of any tax consequence, to spend or invest however you like. On a ₹1.2 crore sale producing a ₹72.6 lakh gain, that means ₹47.4 lakh is simply released to you while the whole gain is sheltered.
Section 86, carrying forward the old Section 54F, applies where the asset sold is a long-term asset that is not a residential house — a plot, a commercial unit, unlisted shares, gold, jewellery. It also directs you to buy a residential house, which is why it is so frequently confused with Section 82. The difference is fundamental: it requires reinvestment of the entire net consideration, not the gain. On the same ₹1.2 crore sale, the reinvestment obligation is not ₹72.6 lakh but ₹1,17.6 lakh — the whole net proceeds. Reinvest less and the exemption is not lost, but it is given only in proportion to the fraction of the net consideration you committed.
Section 85, carrying forward the old Section 54EC, is different in kind. It applies to a long-term gain on land or a building only, and it asks you to put the gain into specified bonds rather than into property. It is capped — the ceiling currently in force is ₹50,00,000 — it carries a lock-in, currently five years, and it must be done within six months of the transfer. Because it asks for the gain and nothing more, and because it involves no builder, no title search and no construction risk, it is often the practical answer for someone who does not actually want another property.
The three interact rather than exclude each other. Bonds can be combined with a house purchase, sheltering part of the gain each way, and where the gain exceeds the bond ceiling that combination is frequently the only route to a full shelter. What cannot happen is a Section 82 and a Section 86 claim on the same transaction — the asset sold is either a residential house or it is not, and that fact decides which of the two applies without any election on your part.
The practical consequence of all this is that the question worth asking is not "which exemption am I entitled to" but "what does each route cost me in cash for the tax it saves". That is a commercial question, and it has a numerical answer, which is what the route table on this page computes.
The Section 86 trap: the whole net consideration, not the gain
This is the single most expensive misunderstanding in Indian capital-gains planning, and it costs real money every year to people who did everything else right.
Someone sells a plot of land for ₹1.2 crore. They paid ₹45 lakh for it and spent ₹2.4 lakh on brokerage, so the net consideration is ₹1,17.6 lakh and the long-term gain is ₹72.6 lakh. They know that reinvesting in a house gives an exemption. They buy a house for ₹72.6 lakh, matching the gain exactly, and file on the basis that the gain is fully sheltered. It is not. Because the asset sold was a plot rather than a residential house, the provision that applies is Section 86, and Section 86 requires reinvestment of the whole net consideration of ₹1,17.6 lakh. Having reinvested ₹72.6 lakh, they have committed 61.7% of the net consideration, so 61.7% of the gain is exempt and the remaining 38.3% is not. On the figures above, that is a tax bill of over ₹4 lakh they did not expect, on a transaction they believed was fully covered.
The proportion rule is worth stating precisely, because it is also the reassuring half of the story. The exemption is the capital gain multiplied by the fraction of the net consideration reinvested. There is no cliff and no all-or-nothing test: reinvest half the net consideration and half the gain is exempt. Reinvest nothing and nothing is exempt. That linearity is what makes partial reinvestment a sensible decision rather than a failed one — but it has to be a decision taken knowingly, with the arithmetic in front of you.
The rule also produces a consequence that surprises people who have only ever dealt with Section 82: under Section 86, each rupee you commit is worth far less in tax saved. On the figures above, the full Section 86 shelter requires ₹1,17.6 lakh of cash and saves ₹10.55 lakh of tax — ₹8.97 of tax saved for every ₹100 committed. The bond route on the same gain requires ₹50 lakh and saves ₹7.61 lakh — ₹15.22 per ₹100. The bond route saves less in absolute terms and is far more efficient per rupee. Where the gain is a small fraction of the sale price, which is the usual position on an old plot or a long-held holding, the gap widens further and the house route becomes an extraordinarily expensive way to buy a tax saving.
Two further conditions on the Section 86 route are worth knowing before you plan around it, because both are absolute. The first is the ownership condition: if you own more than one other residential house on the date of transfer, the route is closed to you entirely. It is a relief for people who are not already property owners, and no amount of reinvestment overcomes the disqualification. The second is that buying or constructing another residential house within the prescribed period after the transfer can withdraw the exemption you claimed — so this route constrains your property plans for years afterwards, not merely for the year of the sale.
One useful point of relief in the other direction: the expenses of transfer reduce the net consideration, and therefore reduce what you have to reinvest. A properly documented brokerage bill on a large sale can lower the Section 86 reinvestment obligation by a meaningful sum. It is one of the few places in this area where good record-keeping directly reduces the cash you have to find.
The bond route, honestly assessed
The Section 85 bond route is generally presented as the easy option, and in one important respect it is: it asks for the gain and nothing more, there is no property to find, no builder to trust, no title to verify and no three-year construction risk to carry. For someone who has sold a plot and has no desire to own another property, it is very often the right answer. But it comes with three constraints, and all three are routinely understated.
The first is the ceiling. The limit currently in force is ₹50,00,000, and the detail that matters is what it applies to: it is an aggregate across the financial year of the transfer and the following financial year. The familiar plan of investing up to the limit in March and again in April, doubling the shelter, worked once and does not now — but it is still being recommended, and acting on it produces ₹50 lakh of bonds that buy nothing at all. On a gain larger than the ceiling, bonds cannot provide a full shelter by themselves, and the balance has to go through a house route or be taxed.
The second is the lock-in, currently five years. This is a genuine commitment, not a parking space. The bonds pay a modest rate of interest, and that interest is fully taxable at your slab rate every year — it is not tax-free, which a surprising number of investors assume. The correct comparison is therefore not "₹50 lakh for a ₹7.6 lakh saving" but "₹50 lakh for a ₹7.6 lakh saving, minus five years of the return that ₹50 lakh would have earned elsewhere after tax, plus the modest bond interest after tax". Run that comparison before treating the exemption as free money. For a 40-year-old with productive uses for capital, it is often a closer call than it looks; for a 70-year-old who wants safe fixed income anyway, it is usually straightforward.
The third is the window, and it is the hardest date in this entire area. The bonds must be bought within six months of the transfer. There is no extension, and — this is the part that catches people — there is no Capital Gains Account Scheme fallback. Under the house routes you can park the money and decide later. Under the bond route you cannot. If the six months pass and the bonds have not been bought, the exemption is gone permanently, with no remedy of any kind. Anyone contemplating this route should diarise the date in the week of the sale, and should be aware that these bonds are periodically subject to issue limits and closed windows, so leaving it to the fifth month is a genuine risk rather than a theoretical one.
One asset-class point deserves emphasis because the bond route is so widely described as a general capital-gains shelter. It is nothing of the kind. It is available only against a long-term gain on land or a building. A gain on listed or unlisted shares, mutual-fund units, gold or jewellery does not qualify however long the asset was held. On a gain outside land and buildings, the only reinvestment exemption available is the Section 86 house route, with its whole-consideration requirement and its ownership condition — which is precisely the combination that leaves so many share and gold sellers with no shelter at all.
The Capital Gains Account Scheme, and what missing it actually costs
More of these exemptions are lost to a bank account than to any technical condition in the Act, and the mechanism is worth setting out carefully because almost everyone who loses an exemption this way was always going to complete the purchase.
The reinvestment windows are generous. You have two years from the transfer to buy a house, three years to build one, and a house bought in the year before the transfer also counts. Against that, the return-filing due date arrives much sooner — 31 July, or 31 October where the return is subject to audit. The rule is that any part of the gain not actually spent on the new house by that due date must be deposited in a Capital Gains Account Scheme account by that date. Deposit it and the clock keeps running normally; you draw the money out as the purchase or construction proceeds and the exemption stands. Fail to, and the exemption on the unspent slice is refused — not deferred to a later year, not reduced, refused — even if you buy exactly the house you always intended to buy a few months afterwards.
The scale of the exposure is easy to underestimate until it is priced. Take a house sale producing a ₹72.6 lakh gain, against other income of ₹18 lakh, where the seller intends to reinvest the whole gain in a new house but has so far paid only a ₹10 lakh booking amount. If the remaining ₹62.6 lakh is in a Capital Gains Account Scheme deposit by the due date, the tax on the gain is nil. If it is sitting in an ordinary savings account on that date instead, the tax is ₹9,11,820. Nothing else about the transaction changes: same house, same seller, same intention, same eventual purchase. The entire difference is which account the money was in on one particular day.
The account itself is unremarkable. It is opened at a designated branch of a public sector bank, before the due date, and it costs nothing. Money in it remains yours and is withdrawable for the qualifying purchase. There is no realistic argument against doing it and no remedy if you do not, which makes it about as asymmetric a decision as exists in tax compliance. The practical advice is simple: if you are going to take a house route at all, open the account when you sell, not when you file. People who plan to open it "before July" reliably discover in July that the branch wants documents they do not have to hand.
Two further points about the account are less well known. First, the deposit defers the charge, it does not extinguish it: if the money is never used for a qualifying purchase within the reinvestment window, the unutilised balance becomes taxable as a capital gain in the year the window expires. The account buys you time and nothing else. Second, withdrawals are meant to be applied to the purchase within a short period, so it is not a general-purpose savings vehicle to dip into and repay.
And it does not apply at all to the bond route. There is no equivalent for Section 85. That asymmetry is worth holding in mind when choosing between the routes: the house routes come with a mechanism for buying time, and the bond route comes with none.
How the tax on the gain is actually computed
For a long-term gain on immovable property transferred on or after 23 July 2024, the charge under Section 198 is at 12.5%, with no indexation, plus surcharge and 4% cess. That is the base position, and this calculator uses it as the default.
There is one exception, and it is important to be exact about who gets it. A resident individual who acquired an immovable property before 23 July 2024 may compute the tax at the old 20% rate with indexation, and pay whichever of the two figures is lower. That grandfathering is resident-only. It is not available to a non-resident in any circumstances, which means an NRI selling a property held for twenty years computes the gain on actual cost with no inflation adjustment at all. On a property bought in 2005 that is a substantial difference, and it is one of the sharper resident-versus-NRI distinctions in the Act. The calculator on this page leaves the rate editable so a resident can test the alternative basis, but it does not choose between them; that comparison belongs in a dedicated tool.
Surcharge is where most calculators go wrong, and the error runs in one direction. Surcharge is determined by total income, not by the gain alone, and on a large sale it is very often the gain itself that pushes total income across a threshold. But the surcharge on the capital-gains component is capped at 15%, even where total income is high enough to attract 25% on ordinary income. Applying the full ladder to a large gain overstates the tax materially — on a ₹5 crore gain the difference between a correct 15% cap and an incorrect 25% is well into seven figures. This calculator applies the cap.
The rebate under Section 156 is applied only where it genuinely arises. It reduces the tax on ordinary income where total income is within the threshold, but it does not shelter income taxed at a special rate — so a small capital gain in an otherwise low-income year still bears tax at 12.5% plus cess even though the salary alongside it is fully rebated. It is not applied at all for a non-resident.
One presentational point matters for reading the output. Every tax figure on this page is the tax attributable to this gain — total tax with the gain, less the tax the same person would pay on their other income alone. That is why the effective rate reconciles to the figures, and why a fully sheltered gain shows nil rather than showing the tax on your salary next to a line that says the gain is covered. It also means the effective rate can exceed the flat rate: where the gain drags total income over a surcharge threshold, the additional surcharge falling on your other income is genuinely caused by the gain and is included. On the worked ₹72.6 lakh case above, the all-in cost of the gain is 14.53% rather than the 14.30% the flat rate and surcharge alone would suggest, and the difference is exactly that effect.
Finally, a large gain has consequences beyond the exemption question. It falls into your advance-tax instalments from the quarter in which the sale occurred, and a gain realised late in the year is a common source of interest under Sections 424 and 425 even where the tax itself is paid in full before March. A non-resident seller faces a further layer entirely: tax is withheld on the sale, typically on the gross consideration rather than the gain, which routinely locks up several times the real liability until the return is filed and a refund obtained.
Deadlines, conditions and the things that unwind an exemption later
The exemptions on this page are not one-off filings. Each carries conditions that run for years after the claim, and each can be withdrawn if those conditions are broken. That is worth understanding before you commit, because the constraints outlast the tax saving.
The timing windows for the house routes are: a house purchased within one year before the transfer qualifies; a house purchased within two years after qualifies; a house constructed within three years after qualifies. The backward-looking year is under-used and worth checking — a house bought shortly before the sale, perhaps in anticipation of it, may already satisfy the reinvestment condition without anything further being done. The construction window is longer but harder to police, and delays in completion are a common reason for a claim to fail at assessment. The calculator computes all four dates from your date of sale so you can see them together.
The three-year lock-in on the new house applies to both Section 82 and Section 86. If the new house is sold within three years of its purchase or construction, the exemption is withdrawn, and the sheltered gain comes back into charge in the year of that later sale — on top of whatever gain that second sale itself produces. This is a three-year commitment to holding the property, and it is routinely forgotten by people who buy with a view to flipping.
The bond lock-in, currently five years, works similarly: transferring or converting the bonds before the lock-in expires brings the exempted gain back into charge. Taking a loan against the bonds is generally treated the same way, which is a trap for anyone who assumes locked-up capital can at least be borrowed against.
A monetary ceiling of ₹10 crore applies to the exemption available on reinvestment in a residential house, under both the Section 82 and Section 86 routes. It changes nothing below that figure, which covers the overwhelming majority of cases, but on a very large gain it means the house route simply cannot deliver a full shelter, and the balance is taxable however much property is bought. It is exposed as an input on this page rather than asserted, so it can be confirmed for the year in question.
The new house must be in India. Reinvesting in a property abroad — an obvious plan for a returning NRI or someone with children settled overseas — does not qualify, and the exemption fails entirely. This is a condition worth raising early in any cross-border conversation, because by the time it comes up at filing the money has usually moved.
On section numbering, three provisions are cited on this page with confidence because each has been verified against the Income-tax Act, 2025: Section 82 for reinvestment in a residential house on the sale of a residential house (old Section 54), Section 85 for the specified-bond route (old Section 54EC), and Section 86 for reinvestment of the net consideration on the sale of an asset other than a residential house (old Section 54F). Also cited are Section 198 for the long-term charge, Section 196 for the short-term charge, Section 156 for the rebate and Sections 424 and 425 for interest. The Capital Gains Account Scheme is described in words throughout and no section number is asserted for it, because none has been verified — on a firm's own public tool, describing a provision accurately without a citation is preferable to inventing one.
Treat the output as a well-informed basis for a conversation rather than a filing position. The figures reward being taken to an advisor while the money is still uncommitted, because almost everything on this page can be planned and almost nothing can be fixed afterwards.
Frequently asked questions
What is the difference between Section 82 and Section 86?
The asset you sold, and the amount you have to reinvest. Section 82 (old 54) applies when you sell a residential house, and it asks you to reinvest only the capital gain in another residential house — the rest of the proceeds are yours with no tax consequence. Section 86 (old 54F) applies when you sell anything else and asks you to reinvest the entire net consideration. On a ₹1.2 crore sale with a ₹72.6 lakh gain, that is the difference between reinvesting ₹72.6 lakh and reinvesting ₹1,17.6 lakh. You do not choose between them: the nature of the asset sold decides which one applies.
What happens if I reinvest less than the full amount?
Under Section 82 the exemption is simply capped at what you reinvested — put in half the gain and half the gain is exempt. Under Section 86 it is proportionate to the net consideration, which is harsher: reinvest half the net consideration and only half the gain is exempt, even if the sum you put in exceeds the whole gain. This is the trap that catches people who match their reinvestment to the gain and assume they are covered. There is no cliff in either case and nothing is forfeited by a partial reinvestment — but the arithmetic is worth doing before the money is committed, not after.
How much do I have to reinvest to pay no tax at all?
Under Section 82, the gain. Under Section 86, the whole net consideration — sale price less your expenses of transfer. Under Section 85, the gain, but only up to the bond ceiling, so a gain above ₹50,00,000 cannot be fully sheltered by bonds alone. The calculator computes all of these from your figures and, more usefully, shows the tax saved per ₹100 committed for each route. That last figure is what actually decides the question: on a worked Section 86 case it is ₹8.97 against ₹15.22 for the bond route, because under Section 86 most of each rupee is doing no exemption work.
What is the Capital Gains Account Scheme and what happens if I miss it?
It is a deposit account at a designated bank branch that holds gain money between the sale and the purchase of the new house. The rule is that anything you have not actually spent by the due date for filing your return must be in that account by that date. Miss it and the exemption on the unspent portion is refused outright — not deferred — however faithfully you buy the house afterwards. On a ₹72.6 lakh gain where only a ₹10 lakh booking amount has been paid, the difference between depositing and not depositing is ₹9,11,820 of tax. The account costs nothing and takes an afternoon. Open it when you sell, not when you file.
Can I use the bonds under Section 85 for a gain on shares or gold?
No. The specified bonds are available only against a long-term gain on land or a building. A gain on listed or unlisted shares, mutual-fund units, gold or jewellery does not qualify however long the asset was held. This matters because the bond route is widely described as a general capital-gains shelter and it is not one. If you sold shares or gold, your only reinvestment exemption is the Section 86 house route — with its whole-consideration requirement and its condition that you do not already own more than one other residential house.
I already own two flats. Does that affect anything?
It closes Section 86 entirely. That route is reserved for people who are not already property owners, so owning more than one other residential house on the date of transfer disqualifies you outright — no amount of reinvestment overcomes it. This is the most commonly missed condition in the whole area. It does not affect Section 82, which has no such restriction, and it does not affect the Section 85 bond route. If you sold a plot and own two flats, bonds are very likely your only shelter, and the six-month window applies.
I am an NRI. Are these exemptions available to me?
Yes — all three are available to non-residents on the same terms. What is not available to you is the option to compute the gain at 20% with indexation on a property acquired before 23 July 2024. That grandfathering is resident-only, so a non-resident is on the flat 12.5% with no inflation adjustment however long the property was held. There is also a practical layer residents do not face: tax is withheld on your sale, usually on the gross consideration rather than the gain, which routinely locks up several times the real liability until you file. A lower-deduction certificate obtained before completion is the way to address that, and it has to be applied for in advance.
What can unwind an exemption after I have claimed it?
Several things, and they run for years. Selling the new house within three years withdraws the Section 82 or Section 86 exemption and brings the sheltered gain back into charge in the year of that later sale. Transferring the bonds before the lock-in expires, or borrowing against them, does the same for Section 85. Under Section 86, buying or constructing another residential house within the prescribed period after the transfer can also withdraw the claim. And money left unused in a Capital Gains Account Scheme deposit when the reinvestment window expires becomes taxable in that year — the account defers the charge, it does not remove it. The new house must also be in India; reinvesting abroad fails the condition entirely.
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