Once a property sale is classified as long-term (see our LTCG vs. STCG explainer for the 24-month line), NRIs have access to the same reinvestment-based exemptions available to resident sellers — most commonly Section 54 (reinvesting in another residential property) and Section 54EC (reinvesting in specified capital gains bonds). Neither is automatic; both require action within a specific window after the sale.
Section 54: buying or building another home
If the gain is reinvested into purchasing a residential property in India within one year before or two years after the sale (or constructing one within three years of the sale), the reinvested portion of the LTCG is exempt. If the new property costs less than the full gain, only the invested amount is exempt — the shortfall is still taxed. A once-in-a-lifetime option allows reinvesting into two residential properties instead of one, but only if the total gain is below a specified cap, and there's a separate overall ceiling on how much gain can be exempted this way — both figures worth confirming against the current-year rules rather than assuming a number from a prior year still holds.
Section 54EC: bonds instead of property
For sellers who don't want to reinvest in another property, Section 54EC allows LTCG specifically from land or a building to be exempted by investing in specified bonds (typically issued by government-backed infrastructure institutions) within six months of the sale date — subject to an annual cap on how much can go into these bonds per financial year. This route doesn't tie up funds in another property, but the bonds themselves come with their own lock-in period and lower yield than most alternative investments, which is the trade-off for the tax exemption.
The LTCG/STCG classifier on this site's Real Estate Capital Gains page calculates the underlying gain these exemptions apply to; it doesn't currently model the Section 54/54EC reinvestment math itself, so treat the exemption calculation as a manual next step once you have the classifier's gain figure.