Data is AI-generated from 20+ public sources. Last updated June 2026. Disclaimer | Report error
If you sold an asset and have long-term capital gains, you can save tax by investing in specified government bonds within 6 months. Here's the complete guide for FY 2026-27.
Section 54EC allows you to claim exemption on long-term capital gains if you reinvest the gains (not the sale proceeds) into specified bonds within 6 months of the sale date.
Sell any LTCG asset
House, land, gold, equity — any asset with LTCG
Invest gains in bonds
Within 6 months. Amount = LTCG (capped ₹50L)
The exempt amount is the lower of:
Only four government-backed entities issue 54EC-eligible bonds. These are ultra-safe, fixed-return instruments.
National Highways Authority of India
Highway infrastructure bonds
Rural Electrification Corporation
Power sector bonds
Indian Railway Finance Corporation
Railway infrastructure bonds
Power Finance Corporation
Power sector bonds
BOND DETAILS
Interest rate: ~5-5.75% (varies by issuer). Tenure: 5 years (lock-in). Interest is taxable at slab rates. Bonds are redeemable at par after lock-in.
| Rule | Detail |
|---|---|
| Maximum exemption | ₹50,00,000 |
| Investment deadline | Within 6 months of sale date |
| Lock-in period | 5 years |
| What to invest | Capital gains amount only (not sale proceeds) |
| Who can invest | Resident individuals and HUFs |
| Asset sold | Any LTCG asset (not just real estate) |
6-MONTH DEADLINE IS STRICT
If you miss the 6-month window, you lose the exemption entirely. There is no extension. Mark this date in your calendar immediately after selling.
There are multiple reinvestment exemption sections. Here's how they differ:
| Section | Asset Sold | Reinvest In | Limit | Lock-in |
|---|---|---|---|---|
| 54 | Residential house | Residential house | Full CG | 3 years |
| 54EC | Any LTCG asset | NHAI/REC/IRFC/PFC bonds | ₹50L | 5 years |
| 54F | Any non-house LTCG asset | Residential house | Full CG | 3 years |
WHEN 54EC WINS
54EC is the only option if you sold equity, gold, or any non-real-estate asset and want to avoid CG tax. It's also simpler — no need to buy a house. But the ₹50L cap is a hard limit.
Conservative default: Sections 54-54GB reinvestment exemptions are likely disallowed under the new regime. Most secondary sources agree. Confirm with a CA before relying on this exemption.
If you plan to use 54EC or any other reinvestment exemption, the old regime is likely the safer choice. The new regime's lower slab rates may or may not compensate for the loss of these exemptions — a CA can calculate both scenarios for your specific case.