Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The exemptions are India-only
Following amendments, Section 54 and 54F require the new residential house to be situated in India. Section 54EC bonds are issued by Indian entities (NHAI, REC and others). So a reinvestment outside India — a flat in Dubai or London — does not earn the exemption.
What this means for an NRI
An NRI selling Indian property who wants to shelter the gain must reinvest within India — another Indian house, or Indian 54EC bonds. There is no Indian relief for buying property abroad with the proceeds, even though you can repatriate the money and buy abroad after paying the tax. Confirm the current conditions, as they have changed.
A worked example
Example: you sell a Mumbai flat for a ₹40 lakh gain and want to buy a home in Canada. The purchase abroad gives no Section 54 relief, so the ₹40 lakh is taxable in India — you pay the tax, then repatriate the rest within the USD 1 million limit. To save the tax, you would instead reinvest in an Indian house or 54EC bonds. Our NRI property service can structure it.