In short
The Income-tax Act, 2025, which applies from 1 April 2026, keeps the three well-known reinvestment reliefs under new numbers: section 82 (formerly section 54) for a long-term gain on a residential house reinvested in a house; section 85 (formerly 54EC) for a gain on land or a building reinvested in specified bonds within six months, up to ₹50 lakh; and section 86 (formerly 54F) for a gain on an asset other than a residential house reinvested in a house. These are central rules, the same in every state. The old section numbers are given here only to help you read older material.
Section 82 (formerly 54): house sold, house bought
Who: an individual or Hindu undivided family. The text does not limit it to residents.
What: long-term capital gains on a residential house (buildings or land appurtenant, income from which is chargeable under “Income from house property”), the “original asset”.
Reinvestment in one residential house in India (“new asset”): bought within one year before or two years after the date of transfer, or constructed within three years after.
Effect (section 82(1)): if the gain exceeds the cost of the new asset, the excess is charged; if the gain is equal to or less than the cost, no capital gain is charged. For the new asset sold within three years, the cost is nil or reduced by the gain not charged.
Two houses: if the gain does not exceed ₹2 crore, you may choose to buy or build two residential houses in India instead of one (82(5)); this option can be exercised once in a lifetime (82(6)).
Limits: a cost of the new asset above ₹10 crore is not taken into account (82(7)); a gain above ₹10 crore is not taken into account for the deposit rule (82(8)).
If you have not bought or built by the return date (82(2)): deposit the unutilised amount in a specified bank or institution, under the scheme notified by the Central Government, before filing the return and not later than the due date for filing under section 263(1), and attach proof with the return. If you do not use the deposit by the end of three years from the transfer, the unutilised amount is charged as income of the year in which the three years expire, and you may withdraw it (82(4)).
Section 86 (formerly 54F): other asset sold, house bought
What: gain on any long-term capital asset that is not a residential house (for example, a plot of land or a shop).
Reinvestment: one residential house in India, bought within one year before or two years after the transfer, or built within three years after.
Effect (86(1)): the relief is proportional. If the net consideration exceeds the cost of the new asset, the gain not charged is the gain multiplied by (cost of the new asset ÷ net consideration). If the net consideration is equal to or less than the cost, no gain is charged. “Net consideration” means the full value of consideration less the expenditure wholly and exclusively in connection with the transfer (86(10)).
Conditions that take the relief away (86(5) and (6)): the relief does not apply if you own more than one residential house, other than the new asset, on the date of transfer, or if you buy another house within one year (or build one within three years) after the transfer, and income from such a house is chargeable as house property. If you buy another house within two years, or build one within three years, the gain not charged is charged in that year (86(6)). If you sell the new asset within three years, the gain not charged is charged then (86(7)).
Limits: a cost above ₹10 crore is not counted (86(8)); net consideration above ₹10 crore is not counted for the deposit rule (86(9)). The deposit-in-a-specified-bank mechanism of section 86(2) and (4) is like that of section 82.
Section 85 (formerly 54EC): land or building sold, specified bonds bought
What: long-term gains from the transfer of land or building, or both.
Reinvestment: invest the gain, whole or part, in a long-term specified asset “within six months after the date of such transfer”.
Specified asset (85(6)): a bond redeemable after five years, issued on or after 1 April 2018 by the National Highways Authority of India or by the Rural Electrification Corporation Limited, or any other bond the Central Government notifies.
Effect: the gain not exceeding the investment is not charged; the excess is.
Cap (85(2)): the investment from the gain on one or more original assets cannot exceed ₹50 lakh in a tax year, or in the year of transfer and the following tax year taken together.
Lock-in (85(3) and (4)): if the bonds are transferred or converted into money within five years, the gain not charged becomes long-term capital gain of that year. A loan or advance on the security of the bonds counts as converting them to money. If you take the benefit, you cannot also claim the section 123 deduction for the same investment (85(5)).
Comparing the three
| Section 82 (ex 54) | Section 85 (ex 54EC) | Section 86 (ex 54F) | |
|---|---|---|---|
| Asset sold | Residential house | Land or building | Any long-term asset except a residential house |
| Reinvest in | Residential house (one, or two if gain up to ₹2 crore) | NHAI/REC and notified bonds | One residential house |
| Window | 1 year before to 2 years after; 3 years to build | 6 months after | 1 year before to 2 years after; 3 years to build |
| Cap | ₹10 crore on cost and on gain for the deposit | ₹50 lakh | ₹10 crore |
| Lock-in | Cost of new asset nil or reduced if sold in 3 years | 5 years | 3 years |
| Who | Individual or HUF | Any assessee | Individual or HUF |
Where this meets the tax on the sale
The tax on the gain itself is in capital gains tax on property. Note that for a non-resident seller the buyer deducts tax at rates in force; a certificate for a lower deduction may be requested under section 395: see NRI selling property: TDS.
What it costs
There is no fee for the relief. The condition is that you keep the money invested for the periods above, and file the proof (for example, the deposit proof) with your return.
Which professional to consult
A chartered accountant for the choice of section and the return; a property lawyer (an advocate enrolled with the State Bar Council) for the purchase of the new house.
Frequently asked questions
Are the old numbers 54, 54EC and 54F still in use?
They apply to events before 1 April 2026. For current transfers use sections 82, 85 and 86 of the Income-tax Act 2025.
Do I have to buy the new house before I sell?
No. The new house can be bought one year before or two years after the transfer, or built within three years after.
What if I have not bought a house by the time I file my return?
Deposit the unutilised amount in a specified bank or institution before filing and not later than the due date, with proof. The Government’s notified scheme governs withdrawal.
Can I use section 85 and section 82 together?
The sections are separate reliefs for the same gain. We did not find a rule in the text that bars using them on different parts of a gain, but the caps and the section 85(5) rule apply. Ask a chartered accountant.
Does an NRI qualify?
Sections 82 and 86 say “an individual or Hindu undivided family” and section 85 says “an assessee”. The text we read does not exclude non-residents.
More guides on selling
Sources
- Income-tax Act, 2025 (Gazette of India Extraordinary), sections 67, 82, 85 and 86 (consulted 14 October 2026)
- TDS compliance: which Act applies (Income Tax Department) (consulted 14 October 2026)