Section 54 → Section 70
Exemption on sale of Residential House
Quick Answer
Section 54 of the Income Tax Act, 1961 (Exemption on sale of Residential House) corresponds to Section 70 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 54
Section 54 of the 1961 Act sets out the rules on exemption on sale of residential house. Capital gains from selling a residential house are exempt if reinvested in another residential house within specified timeframes.
From 1st April 2026, the same subject sits at Section 70 of the Income-tax Act, 2025 — retained and renumbered as Section 70 of the Income-tax Act, 2025. Retained but capped. The maximum deduction allowed under this section is strictly capped at Rs. 10 Crores to prevent ultra-rich tax avoidance.
For Section 54, the practical impact is rated High. The most common tax-saving tool for home sellers.
Sec 54
Provision Summary
Capital gains from selling a residential house are exempt if reinvested in another residential house within specified timeframes.
Sec 70
Provision Summary
Retained but capped. The maximum deduction allowed under this section is strictly capped at Rs. 10 Crores to prevent ultra-rich tax avoidance.
Key Changes & Highlights
- Capital Gains Account Scheme (CGAS) deposits now tracked via PAN to monitor the 3-year utilization deadline automatically.
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Frequently Asked Questions
What is Section 54 of the Income Tax Act, 1961 about?
Section 54 of the Income Tax Act, 1961 covers exemption on sale of residential house. Capital gains from selling a residential house are exempt if reinvested in another residential house within specified timeframes.
Which section replaces Section 54 in the Income-tax Act, 2025?
Section 54 of the Income Tax Act, 1961 maps to Section 70 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained but capped. The maximum deduction allowed under this section is strictly capped at Rs. 10 Crores to prevent ultra-rich tax avoidance.
What is the impact of the change to Section 54 under the new tax code?
The transition impact for Section 54 is rated High. The most common tax-saving tool for home sellers.
What should I watch out for when Section 54 moves to the 2025 code?
Capital Gains Account Scheme (CGAS) deposits now tracked via PAN to monitor the 3-year utilization deadline automatically. These points are specific to Section 54 (Exemption on sale of Residential House).
Disclaimer: This mapping of Section 54 (Exemption on sale of Residential House) to Section 70 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 54 is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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