Section 54EC Double Dip
Get ₹1 crore LTCG exemption by investing across financial years
What is This Hack?
Invest ₹50 lakh in REC/NHAI bonds before March 31 and another ₹50 lakh after April 1 for ₹1 crore total LTCG exemption on property sale
How It Works
Section 54EC allows you to save Long-Term Capital Gains (LTCG) tax on property sale by investing capital gains in specified bonds (REC/NHAI/PFC) within 6 months. The catch? Maximum exemption is ₹50 lakh per financial year. BUT there's a loophole: if you sell property late in the financial year (say, January-March), you can invest ₹50 lakh before March 31 in that FY, and another ₹50 lakh after April 1 in the next FY - both investments are within the 6-month window from sale date. This gives you ₹1 crore total exemption (₹50L × 2 years) instead of just ₹50 lakh. Tax saved: ₹50L × 12.5% = ₹6.25 lakhs additional.
Step-by-Step Implementation
Time Your Property Sale
Ideally sell property between January-March (Q4 of financial year). This ensures you have sufficient time for two investments: one before March 31 and one after April 1.
Calculate Capital Gains
Compute LTCG using our Capital Gains Calculator. If LTCG exceeds ₹50 lakh, this strategy is highly beneficial.
First Investment (Before March 31)
Within 6 months of sale, but before March 31, invest ₹50 lakh in REC/NHAI/PFC bonds. Get certificate showing investment date and amount.
Second Investment (After April 1)
Immediately after April 1 (still within 6 months of sale), invest another ₹50 lakh in the same bonds. This counts toward next FY limit.
File ITR Claiming Exemptions
File ITR for year of sale claiming ₹50L exemption. In next year's ITR, claim second ₹50L exemption. Attach bond certificates to both ITRs.
Lock-In Period
Hold bonds for 5 years mandatory lock-in. Bonds earn ~5.75% interest taxable as income. Don't sell early or exemption will be reversed with penalty interest.
Real Example: Bangalore Villa Sale
Situation
Suresh (NRI in Singapore) sells his Bangalore villa in February 2025 for ₹3 crore. Purchase price: ₹50 lakh in 2010. After indexation, LTCG = ₹1.2 crore. Sale date: Feb 15, 2025. 6-month window: Until Aug 15, 2025.
Without This Hack
Single FY strategy: Invest ₹50L in 54EC bonds. Exemption: ₹50L. Taxable LTCG: ₹70L (₹1.2cr - ₹50L). Tax @ 12.5% = ₹8.75 lakhs.
With This Hack
Double Dip strategy: Invest ₹50L on March 25, 2025 (FY 2024-25). Invest ₹50L on April 10, 2025 (FY 2025-26). Total exemption: ₹1 crore. Taxable LTCG: ₹20L. Tax @ 12.5% = ₹2.5 lakhs.
💰 ₹6.25 lakhs tax saved (₹8.75L - ₹2.5L)
Common Pitfalls to Avoid
- Must invest within 6 months of sale - track deadline carefully
- Both investments must be within 6-month window from sale date
- If you sell in April-December, second investment may fall outside 6-month window
- 5-year lock-in is mandatory - breaking it reverses exemption and adds interest
- Interest earned on bonds is taxable as income
- Only specified bonds qualify (REC, NHAI, PFC) - not all bonds
Prerequisites & Requirements
- Property sale with LTCG exceeding ₹50 lakh
- Sale timing: Ideally January-March for optimal double-dip window
- ₹1 crore liquid funds available for investment
- Demat account for bond purchase (or physical application)
- Ability to lock funds for 5 years
- ITR filing to claim exemptions in both years
Key Benefits
- Potential savings: ₹12.5 lakhs tax saved
- Implementation time: 2 months
- Legal status: fully legal
- Risk level: low
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