Can an NRI invest in capital gains bonds under section 85?

Yes, subject to the issuer's terms for NRI investors; the investment must be made within six months of the sale and held for five years, up to Rs 50 lakh.

Can I use both a new house and bonds for the same sale?

Yes. Bonds can cover part of the gain under section 85 and a house the rest under section 82, with tax on any balance.

Must the new house be in India?

Yes. The exemption under section 82 (earlier section 54) is available only for a residential house in India.

Section 82 vs Section 85 (54 vs 54EC) for NRIs: House or Bonds?

Name: NRI Tax Blueprint 2025
Author: Regi Tom Antony
ISBN: 9373100688

Short answer

Section 82 (earlier section 54) exempts the long-term gain on a residential house if you buy or build another house in India within the time limits; section 85 (earlier section 54EC) exempts up to Rs 50 lakh of gain on land or building if you buy notified bonds within six months and hold them for five years. You can combine the two.

Last reviewed: 5 November 2026 · Reviewed by Regi Tom Antony, FCA · NRI property sale services

Side by side

Both apply only to long-term gains (property held more than 24 months).

	Section 82 (earlier 54)	Section 85 (earlier 54EC)
What you sold	A residential house	Land, building or both
What you invest in	A residential house in India	Notified capital gains bonds
Time limit	Buy 1 year before or 2 years after; build within 3 years	Within 6 months of the sale
Limit	Exemption capped at Rs 10 crore	Up to Rs 50 lakh
Lock-in	Selling the new house within 3 years reverses the exemption	5 years; no transfer or loan against the bonds
Capital Gains Account Scheme	Available until you buy or build	Not available

When the house route fits

If you plan to return to India, already want a home here, or have a large gain, a house under section 82 can exempt the whole gain. Where the gain is Rs 2 crore or less, you may, once in a lifetime, use it for two houses. Park unspent money in the Capital Gains Account Scheme before your return due date.

When bonds fit

If you do not want more property, bonds under section 85 are simpler: one investment within six months, fixed interest (which is taxable), and the money back after five years. Check the issuer's terms for NRI investors before the six months run out.

Plot or commercial property sellers

If you sold a plot, land or commercial property, the house option is section 86 (earlier section 54F), which needs the net sale price, not just the gain, invested for full exemption. Model both with the NRI property TDS calculator.

Important information

This guide is general information published by RTA & Associates. It is not tax, legal, financial or investment advice, and it does not create a client relationship. It does not take account of your personal circumstances, and you should not act or refrain from acting on the basis of anything here.

Cross-border outcomes turn on the specific facts — your day-counts, the timing of your move, the wrappers you hold and the treaty position between the two countries. A small change in any of those can change the answer completely.

References to the law, rules or practice of countries other than India are included for general orientation only. They are not advice on the law of that country, and they should be confirmed with a qualified adviser in that jurisdiction before you act.

Tax law, exchange-control rules and treaty positions change, and they change often. This page reflects our understanding as at the date shown above. We do not undertake to update it.

To the extent permitted by law, RTA & Associates and its partners and staff accept no liability for any loss arising from reliance on this page. For advice on your own position, book a consultation.

New house or capital gains bonds? Section 82 vs section 85 for NRIs

Short answer

Side by side

When the house route fits

When bonds fit

Plot or commercial property sellers

Answered, candidly.

Keep going.

Keep exploring.

Ready to plan? Book a consultation with Regi.

Important information

The NRI Blueprint briefing.