Can I claim tax exemption on long-term capital gains from US shares sold outside India?

Selling shares of a US-based employer and a residential plot in the same financial year can leave taxpayers wondering whether the capital gains from both transactions can be covered by the same tax exemption.

In this query, the taxpayer does not own a residential house but holds two residential plots jointly with a friend, as well as agricultural land jointly with his wife and father. The question is whether these existing properties affect eligibility for the capital gains exemption and whether buying a plot and constructing a house on it within the prescribed period can qualify.

Today's Q&A explains such details in response to a query by a reader.

**Question: In this fiscal year 2025 2026 I have got long term capital gains by sale of Restricted Stock Units granted in 2021 by my employer company which is an US MNC. These RSUs are held in the US and sold in the US but tax assessed in India. Additionally, I will be having long term capital gains by way of sale of a residential plot in the next one month or so basically in this same financial year. **

Likewise, the profits made on sale of plot of lands shall also be taxed as long term capital gains if the holding period is more than 24 months and taxed at flat 12.50% without indexation or taxed at 20% with indexation if the same was acquired prior to 23rd July 2024.

In case you wish to go for self-construction of a residential house, the cost of plot of land will also qualify for the purpose of exemption under section 86. For availing this exemption in respect of self-construction of the house on the plot of land proposed to be bought the construction needs to get completed within three years from the date of sale of the shares and plot of land. Please note exemption is not available for purchase of pure plot of land unless a residential house is constructed on such plot of land within three years.

The amount not utilised by the due date of filing of the ITR has to be deposited in a bank account under the Capital Gains Account Scheme. The money so deposited can be withdrawn for purchase or construction of a residential house within prescribed time period.

You cannot avail exemption under section 86 if you hold more than one residential house on the date of sale of the capital assets. Since you do not own any residential house you are eligible to claim exemption under section 86. The ownership of plot of land whether agricultural or non-agricultural land will not affect your eligibility to claim exemption under section 86 of the Income Tax Act, 2025.