Consider individual who has earned a long term capital gain of Rs 2 crore and buys a house for Rs 1.5 crore out of a net sale consideration of Rs 2 crore. Under Section 54F, the exemption will be Rs 1.5 crore, not the full gain, as per the illustration given by Taxgarden.
This is the main difference between 54 and 54f. Under Section 54, the full gain is exempt if the new house costs at least as much as the gain, whereas 54F gives only a proportionate exemption.
What each section covers
Section 54 comes into play when the asset being sold is a residential house. Section 54F is relevant for selling other long‑term assets, like shares, bonds or gold, as IndiaFilings says.
Along with that, Tax2win says Section 54 lets you pick a one-time option to invest in 2 houses, with capital gain up to Rs 2 crore. Section 54F does not give such choice.
Each exemption under the relevant section is limited to Rs 10 crore from the assessment year (AY) 2024-25 onward, as per Kotak Life. They note that the cap was first introduced in the Union Budget 2023 and it applies to income of FY 2023-24 and subsequent years.
ManipalCigna points out that Section 54F is available only to individuals and Hindu undivided families, or HUFs.
Conditions and renumbering
Section 54F has a condition on the houses already owned. As per Savetaxs, the exemption is denied if the taxpayer holds more than one house, apart from the new one, on the date of transfer.
ManipalCigna states that the exemption is allowed where the residential house is constructed within three years from the date of transfer. If the new house is sold within three years of its purchase or construction, the earlier exemption is reversed and the gain becomes taxable in the year of sale.
Under the Income-tax Act 2025, Section 54 is now called Section 82 and Section 54F becomes Section 86 from 1 April 2026, as told by Kotak Life and LegalDev.
