Long term capital gains investment Under Sec54

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This discussion clarifies how to claim deductions under Section 54 for long-term capital gains tax on selling residential property. It explains that to achieve nil tax liability, an investment of approximately Rs 85.27 lakhs is required, using the indexed cost of acquisition for calculation. The funds must be invested in a new residential property within specific timelines, or deposited into a Capital Gains Account Scheme by the Income Tax Return filing due date (July 31st, 2026, unless extended).

V Ishu Hegde

V Ishu Hegde (Querist)

17 April 2026 X Sold residential Property for Rs.17500000 on 30/3/26 .Rs.17500000 17500000
Cost of acquistion on 1/4/2001 is rs 2386500 2386500
indexed cost of property Rs.8973240
ltcg Rs.8526760 15113500
X wants to take deduction under sec54 what is the amount to be invested in residential flat?
if he open a capital gains scheme ac by which date should the amt be in capital gains scheme?

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

17 April 2026 1. For nil tax liability... Rs. 85.27 Lakhs.
2. Before filing relevant ITR or 31st July, 2026 whichever earlier.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

14 November 2026 Agree with Rs 85.27 lakh and the CGAS deadline. Here is why the indexed option is the one to use, and the follow-through.

Why Rs 85.27 lakh gives nil tax
• With indexation (20%): LTCG Rs 85.27 lakh. Investing Rs 85.27 lakh under Sec 54 gives nil tax.
• Without indexation (12.5%): LTCG Rs 1.51 crore. After Rs 85.27 lakh under Sec 54, about Rs 66 lakh remains, so tax of about Rs 8.2 lakh plus cess.
• The proviso to Sec 112 allows the lower tax, so choose the indexed computation. Sec 54 then needs only Rs 85.27 lakh.

Timelines
• Purchase a residential house between 30 March 2025 and 30 March 2028, or construct one by 30 March 2029.
• Amounts not used before filing the return must be deposited in the Capital Gains Account Scheme by the due date under Sec 139(1) (31 July 2026 unless extended). File the return after depositing.
• Withdraw from CGAS only for the purchase or construction. Unused balance after 3 years is taxed in that year.

Conditions
• Only one residential house in India (two once in a lifetime if gain is up to Rs 2 crore). The exemption is capped at Rs 10 crore.
• Don't sell the new house within 3 years.

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