Section 54F exemption on MF redemption proceeds

Tue, 12 May 2026 00:00:00 +0000

Section 54F of the Income Tax Act 1961 provides an exemption from long-term capital gains (LTCG) tax where an individual or HUF transfers a long-term capital asset other than a residential house and reinvests the net sale consideration in the purchase or construction of a new residential property in India within specified time limits. Mutual fund units (whether equity-oriented or debt-oriented) are long-term capital assets when held beyond the applicable holding period, and LTCG arising from their redemption qualifies for Section 54F exemption if the conditions are satisfied. This makes Section 54F a useful provision for investors who redeem a large equity or ELSS fund corpus to fund a property purchase.

Capital Gains Exemption on WebNotes

Section 54F exemption on MF redemption proceeds