Income-tax Act, 2025

Capital gains on transfer of certain capital assets not to be charged in case of investment in residential house - Section 86

Capital gains on transfer of certain capital assets not to be charged in case of investment in residential house.

86. (1) If an individual or a Hindu undivided family has

(a) capital gains arising from the transfer of any long-term capital asset, not being a residential house (original asset); and

(b) within one year before, or two years after, the date of such transfer, purchased, or has within three years after that date constructed, one residential house in India (new asset),

then, the capital gains shall be dealt with as follows:

(i) if the net consideration is more than the cost of the new asset, so much of the capital gains as bears to the whole of the capital gains, the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 67; or

(ii) if the net consideration is equal to or less than the cost of the new asset, no capital gains shall be charged under section 67.

(2) If the net consideration referred to in sub-section (1) is not utilised by the assessee to purchase the new asset within one year before the date of transfer of the original asset, or is not utilised for the purchase or construction of the new asset before filing the return of income under section 263, then,

(a) the unutilised amount shall be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;

(b) such deposit shall be made before the filing of the return and not later than the due date applicable in the case of the assessee for filing the return of income under section 263; and

(c) the proof of deposit shall be submitted along with such return.

(3) For the purposes of sub-section (1), the amount already utilised for purchasing or constructing the new asset together with the deposited amount under sub-section (2) shall, subject to sub-section (8), be deemed to be the cost of the new as .... To read the full section download the app from Google Play store