Under Section 54 you reinvest the gain. Under Section 54F you must reinvest the entire sale consideration to get full exemption — reinvest half and you get half the exemption. That single difference decides most property tax bills.
Three exemptions, three different tests. Choosing the wrong one is expensive and usually irreversible.
Section 54 exempts the capital gain to the extent you reinvest the gain. Section 54F is different: the exemption is gain × (amount invested ÷ net sale consideration). Sell land for ₹90 lakh with a ₹40 lakh gain and buy a house for ₹50 lakh, and you do not get the full ₹40 lakh exempted — you get 50/90ths of it. To exempt the whole gain under 54F, the entire ₹90 lakh has to go into the house.
You cannot claim Section 54F if you own more than one residential house (other than the new one) on the date of transfer. Section 54 carries no such bar. Someone with two flats selling a plot of land gets nothing under 54F, which is a complete answer rather than a reduced one — and it catches people who assume the two sections work the same way.
Bonds of NHAI, REC, PFC or IRFC, within six months of transfer, capped at ₹50 lakh — and that cap runs across two financial years together, so splitting the investment across 31 March does not double it. The lock-in is five years. It is the right tool for a residual gain after a house purchase, not usually for the whole thing.
You have two years to buy and three to construct — but if the money is not actually spent by the due date for filing your return, it must be parked in a Capital Gains Account Scheme deposit with a bank before that date. Miss that step and the exemption fails even though you buy the house well within the statutory window. This is the most common way a valid claim gets denied.
The calculator does the arithmetic. TaxSphere — our free case-law library, 1,184 authorities and the Act in full — has the judgments, the circulars and the statutory text for the same provision.
