Overview

Section 82 of the Income Tax Act, 2025 provides tax relief on certain long-term capital gains from the sale of a residential house. This provision applies to individuals and Hindu Undivided Families (HUFs) who sell a residential house and invest the eligible capital gains in another residential house in India.

The section is applicable from Assessment Year 2027-28 and replaces the earlier Section 54 of the Income-tax Act, 1961.

To claim the exemption, taxpayers must meet the required conditions and invest the capital gains within the specified time limit. Depending on the amount invested and other applicable rules, the exemption can reduce the taxable capital gain.

This article explains Section 82 in simple terms, including who can claim the benefit, the investment conditions, applicable time limits, exemption rules, and the main differences between Section 54 and Section 82.

Section 82 of the Income Tax Act 2025

Section 82 of the Income Tax Act, 2025 provides tax relief on long-term capital gains earned from the sale of a residential house. Individuals and Hindu Undivided Families (HUFs) can claim this benefit when they reinvest the eligible gains in another residential house in India within the required time limit.

The section deals with the sale of a property used for residence and sets out the conditions that must be met to claim the exemption.

Section 82 replaces the earlier Section 54 of the Income-tax Act, 1961. The main rules relating to eligibility, reinvestment, exemption, and the Capital Gains Account Scheme (CGAS) continue under the new provision, subject to the rules of the Income Tax Act, 2025.

In simple terms, Section 82 allows eligible taxpayers to get relief from long-term capital gains tax when they sell a residential house and reinvest the qualifying gains in another residential property in India as required under the law.

Section 82 vs Section 54: What Changed from AY 2027-28?

Section 54 of the Income-tax Act, 1961 applies to transactions covered under the old tax law. Section 82 of the Income Tax Act, 2025 applies to the new tax law from 1 April 2026, which relates to Tax Year 2026-27 and Assessment Year 2027-28.

The main rules under Section 82 are largely similar to the earlier Section 54. The major difference is the section number and the numbering of some related provisions.

Provision	Section 54	Section 82
Eligible taxpayers	Individuals and HUFs	Individuals and HUFs
Property sold	Long-term residential house property	Long-term residential house property
Purchase period	1 year before or 2 years after the sale	Same
Construction period	Within 3 years after the sale	Same
Maximum exemption limit	Subject to the applicable limit	Same limit continues
Two-house option	Available subject to specified conditions	Available subject to the same conditions
CGAS deposit deadline	By the due date for filing the income tax return	Same requirement, with the related section number changed
Capital gains provision	Covered under Section 45	Covered under the corresponding provision of the new Act
Applicable period	Transactions covered by the 1961 Act	From 1 April 2026 under the 2025 Act

 

What Is the Main Change?

For taxpayers, there is no major change in the basic exemption framework. The eligibility rules, property purchase and construction timelines, CGAS requirements, and other key conditions are largely carried forward into Section 82.

The main changes are the new section numbers and updated references used in the Income Tax Act, 2025.

Therefore, taxpayers who are familiar with Section 54 can understand Section 82 as the corresponding provision under the new Income Tax Act, subject to the specific rules applicable to their transaction.

Short-Term vs Long-Term Capital Gains on Residential Property

Under Section 82 of the Income Tax Act, 2025, the exemption is available only for long-term capital gains.

If a residential house is held for more than 24 months before it is sold, it is generally treated as a long-term capital asset. The profit from its sale is then considered long-term capital gain and may qualify for relief under Section 82, if all other conditions are met.

If the property is held for 24 months or less, the gain is generally treated as short-term capital gain. In such cases, the Section 82 exemption is not available.

Exemption on Reinvestment of Capital Gains (Section 82(1))

An individual or HUF can claim an exemption on long-term capital gains from the sale of a residential house if the required amount is invested in another residential house in India.

The new house must be purchased within one year before the sale or within two years after the sale. If the taxpayer chooses to construct a house, the construction should generally be completed within three years from the date of sale.

Example: If a person sells a residential house and earns a long-term capital gain, they may claim an exemption by investing the eligible gain in another residential house within the required time period, subject to all conditions under Section 82.

Deposit of Unused Capital Gains (Section 82(2))

If the capital gain has not been used to purchase or construct the new house before the income tax return filing deadline, the unused amount must be deposited in the Capital Gains Account Scheme (CGAS) within the prescribed time.

How the Deposited Amount Is Treated (Section 82(3))

The amount used to purchase or construct the new house, along with the amount deposited in the CGAS, can be considered for calculating the exemption, subject to the conditions of Section 82.

What Happens to Unused CGAS Money? (Section 82(4))

The amount deposited in the CGAS should be used for the purchase or construction of the new house within the prescribed period.

If any amount remains unused after the specified period, that unused amount may become taxable as capital gains in the year in which the prescribed period ends.

Option to Invest in Two Houses (Section 82(5))

If the long-term capital gain meets the prescribed limit, an individual or HUF may choose to invest the gain in two residential houses in India instead of one, subject to the conditions of the law.

Two-House Option Can Be Used Only Once (Section 82(6))

The option to claim exemption by investing in two residential houses can be used only once during the taxpayer’s lifetime. It cannot be used again for another tax year.

Limit on the Cost of the New House (Section 82(7))

For calculating the exemption, only the eligible cost of the new residential house is considered. If the cost is above the prescribed limit, the excess amount is not taken into account for the exemption.

Limit on Capital Gains (Section 82(8))

If the capital gains are above the prescribed limit, the amount above that limit does not qualify for exemption under Section 82.

Documents Required to Claim Exemption Under Section 82

To claim an exemption under Section 82 of the Income Tax Act, 2025, taxpayers should keep proper records and documents related to the sale and reinvestment.

Commonly required documents include:

 

• • Sale deed of the original residential property.

• • Purchase deed of the new residential house, if a property is purchased.

• • Possession documents, where applicable.

• • Construction agreements, bills, invoices, and payment records if a new house is constructed.

• • Completion or occupancy certificate, if available.

• • A calculation of the long-term capital gain.

• • Capital Gains Account Scheme (CGAS) deposit receipt, if applicable.

• • CGAS account statement or passbook showing deposits and withdrawals.

• • Bank statements and payment records for the purchase or construction of the new house.

• • Income Tax Return and related details showing the exemption claimed under Section 82.

Keeping these documents safely can help prove that the required conditions were followed and support the exemption claim if the tax authorities ask for clarification.

Support for Capital Gains Tax Filing

Taxpayers may need to calculate their capital gains correctly and report the exemption properly in their Income Tax Return. Professional tax support can help with calculating the gain, checking the reinvestment requirements, reviewing CGAS requirements, and reporting the exemption correctly.

Assistance may also be useful for reviewing property-related documents, calculating capital gains, and ensuring that the applicable tax requirements are followed.

Conclusion

Section 82 of the Income Tax Act, 2025 provides tax relief to eligible taxpayers who sell a residential house and reinvest the qualifying capital gains in another residential property.

To claim the exemption, taxpayers should carefully follow the required purchase or construction timelines, meet the CGAS requirements where applicable, and understand the rules for investing in one or two residential houses.

Maintaining proper documents and completing the required steps on time can help support the exemption claim and avoid problems during tax assessment. Taxpayers should review their individual circumstances and the applicable rules before claiming the benefit under Section 82.

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