Real estate

Section 54EC: capital gains bonds

Sell land or a building, and the long-term capital gain can stay out of tax if you put that gain into specified bonds within six months. The cap is ₹50 lakh. The bonds, the lock-in, and the deadline for FY 2026-27 are below. The investor guide puts the same exemption next to shares and other sales.

Official sources

Section 115BAC (1961 Act text as hosted). It withdraws the exemptions and deductions it lists, including Chapter VI-A deductions other than section 80CCD(2), section 80CCH(2), and section 80JJAA. It does not name sections 54 to 54GB. This page treats those as capital-gains exemptions you can use in either regime.
Income-tax Act, 2025 (CBDT hub), for the Act text that applies when you file.
Income-tax return forms, for the return in which you report the gain and the exemption.

How the exemption works

Section 54EC exempts long-term capital gains when you invest the gain in specified bonds within 6 months of the sale date. The amount you invest is the gain. You do not have to invest the whole cheque from the buyer.

STEP 1

Sell land or a building

Long-term gain from land or a building, or both. Not gold or equity.

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STEP 2

Invest the gain in bonds

Within 6 months. The amount is the long-term gain, capped at ₹50 lakh.

The exempt amount is the lower of:

→ The capital gain on that sale
→ ₹50,00,000

A gain under ₹50,00,000 can be exempt in full if you invest that gain in time. A larger gain stops being exempt at ₹50,00,000. The rest stays taxable.

Which bonds qualify

Four government-backed entities issue bonds that qualify: REC, PFC, IRFC, and HUDCO. HUDCO was notified from April 2025. NHAI stopped issuing Section 54EC bonds from 1 April 2022.

REC

Rural Electrification Corporation

Power sector bonds

PFC

Power Finance Corporation

Power sector bonds

IRFC

Indian Railway Finance Corporation

Railway infrastructure bonds

HUDCO

Housing & Urban Development Corporation

Housing and urban infrastructure bonds

What you earn, and for how long

Interest is about 5.25% a year (as of 2026, and the rate varies by issuer). The term is 5 years, which is the lock-in. Interest is taxed at your slab rate. After the lock-in, the bonds are redeemed at par: you get back the amount you invested.

Limits and the 6-month date

Rule	Detail
Maximum exemption	₹50,00,000
Investment deadline	Within 6 months of the sale date
Lock-in period	5 years
What to invest	The capital gain, not the sale price
Who can invest	Resident individuals and HUFs (a Hindu Undivided Family)
Asset sold	Land or a building, or both. Not gold or equity.

Six months from the sale date

Invest after those six months and the exemption is not available. There is no extension. Note the date when you sell. Other due dates for the year are on the tax calendar.

54, 54EC, and 54F

Section 54, Section 54EC, and Section 54F can all reduce tax when you reinvest a long-term gain. The asset you sold, and what you have to buy, are not the same.

Section	Asset sold	Reinvest in	Limit	Lock-in
54	Residential house	Residential house	Full capital gain	3 years
54EC	Land or building	REC, PFC, IRFC, or HUDCO bonds	₹50 lakh	5 years
54F	Any long-term asset that is not a house	Residential house	Full capital gain	3 years

Bonds, or another house

Under Section 54EC you buy the bonds. You do not have to buy another house. The exempt amount still cannot go above ₹50 lakh, and equity, gold, and other assets are outside this section. Under Section 54 and Section 54F the reinvestment is a residential house, and the lock-in in the table is 3 years. Home-loan interest on a house you keep is a different set of rules, on the house property guide.

Old regime and new regime

check_circle Available in both regimes

Sections 54 to 54GB are exemptions on capital gains. They are not Chapter VI-A deductions. Section 115BAC does not disallow them, so you can use Section 54EC in the old regime or the new regime.

A gain above the ₹50,00,000 exemption is still taxed. The regime you use changes the slab rate on that remaining gain. It does not decide whether Section 54EC is open to you. If you are unsure which regime fits the rest of your income, compare them in the regime comparator.

How the exemption works

Which bonds qualify

Limits and the 6-month date

54, 54EC, and 54F

Old regime and new regime

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