I have made long term capital gains of Rs. 80 lakhs by selling shares allotted under ESOP in June 2024. Can I put ₹50 lakh in capital gains bonus to claim exemption under Section 54EC in FY 2024-25 and buy a house for ₹30 lakh during financial year 25-26 to claim exemption under Section 54 to save capital gains tax on the entire Rs? 80 lakh?
Please note that exemption under Section 54EC by investing capital gains in capital gains bonds of specified financial institutions is available only to long-term capital gains that come from land or buildings and not from any other asset.
Secondly, as you mentioned, you can claim tax exemption on long-term capital gains arising from the sale of any asset other than a residential house by investing in a residential house under Section 54F, not Section 54.
Clarifications on capital gains exemptions
To claim exemption under Section 54F, you need to invest the sale proceeds, not the capital gains you mentioned. So, to claim the long-term capital gains exemption of Rs. 80 lakh, you will have to invest the entire sale consideration received on sale of ESOP shares to purchase or construct a residential house within the prescribed period. The residential house must be purchased within two years from the date of sale of the shares. If it is under construction, it must be completed within three years and possession must be obtained.
Please note that if the money is not used to purchase a residential home before the application deadline, Income tax return (ITR)On July 31, 2025, you must deposit the balance into a capital gains account at a licensed bank. The money deposited into the capital gains account can be used to make housing payments within the established time frame.
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Balwant Jain is a tax and investment expert and can be contacted at [email protected] and @jainbalwant on his X account.
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