Quick Summary
Various Exemptions Available From Capital Gains Under Income Tax Act, 2025 Capital gains arising from the transfer of assets may result in a significant tax liability. However, the Income-tax Act, 2025, as amended by the Finance Act, 2026, provides several exemptions where the capital gains are reinvested in specified assets or used for prescribed purposes. The Income Tax Department has published a consolidated reference covering various exemptions available in respect of capital gains under S
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FAQ :
These sections provide various exemptions from capital gains tax when the proceeds from the transfer of assets are reinvested in specified assets or used for prescribed purposes.
Eligible individuals and HUFs can claim exemption if long-term capital gains from a residential house are reinvested in another residential house in India. The purchase must be within 1-2 years before/after transfer, or construction within 3 years. A deposit in the Capital Gains Account Scheme (CGAS) is also an option.
Yes, under Section 83, individuals and HUFs can get an exemption for capital gains from agricultural land if they invest in new agricultural land within two years of the original transfer.
The cost of the new asset for exemption purposes cannot exceed ₹10 crore. This limit also applies to amounts deposited in the Capital Gains Account Scheme when no direct investment is made.
Exemptions can be withdrawn if the reinvested asset or property is transferred within a specified period (often three years), or if funds deposited under the Capital Gains Account Scheme are not utilised within the prescribed time.
No, capital gains exemptions are not automatic. Taxpayers must meet specific conditions related to the original asset, the replacement asset, the investment amount, and the timing of the investment.
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