Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
How 54EC works
Section 54EC lets you exempt a long-term capital gain on property by investing it in specified capital-gains bonds — NHAI, REC, PFC or IRFC — within 6 months of the sale. The maximum is ₹50 lakh, and the bonds are locked in for 5 years. Unlike Section 54, you don’t have to buy another house.
Points to watch
You invest the gain, not the whole sale value, and the ₹50 lakh ceiling applies across a financial year. The bond interest (around 5%) is taxable. Breaking the 5-year lock-in reverses the exemption. Confirm the current limit, rate and lock-in.
A worked example
Example: you have a ₹45 lakh long-term gain on a flat. Investing the full ₹45 lakh in 54EC bonds within 6 months makes the entire gain exempt — no capital-gains tax. Combined with a nil-TDS certificate, little is deducted at the sale either. If your gain exceeds ₹50 lakh, pair 54EC with Section 54. Watch the clock: the six-month window from the sale can be tighter than it sounds, because the bonds have funding cycles and the ₹50 lakh ceiling applies across the financial year — so splitting a large gain across two years to use two ceilings only works if both fall within six months of the sale, which is rarely possible. Plan the bond purchase the moment the sale is agreed. Our NRI property service can plan it.