Moved abroad, selling mutual funds to buy a house in India? Know the tax rules

A non-resident Indian can claim Section 54F relief on long-term capital gains from selling mutual funds by investing the net sale proceeds in a residential house in India, subject to conditions.

I left India in February this year and moved to Luxembourg for a job. I sold my MF holdings just last month and want to use the sale amount to buy a house in Delhi. Will I qualify for Sec 54F exemption? What are the conditions?

—Name withheld on request

Section 86 of the Income-tax Act, 2025 (corresponding to erstwhile Section 54F of the Income-tax Act, 1961) provides deduction to an individual or a Hindu Undivided Family (HUF) against Long Term Capital Gains (‘LTCG’) arising from transfer of a long-term capital asset (not being a residential house property), where the net consideration is invested in a residential house in India, subject to the prescribed conditions.

Since the asset transferred in your case is mutual fund units, the deduction may be evaluated, provided the mutual fund units qualify as long-term capital asset and other prescribed conditions are satisfied. The benefit is available to both resident and non-resident individuals.