Sections 83 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Sections 83 and 84 relieve a capital gain from tax when the money is put into a replacement asset. Section 83 is for an individual or Hindu undivided family that sells land used for agriculture and buys other agricultural land within two years. Section 84 is for compulsory acquisition of land or buildings of an industrial undertaking, with three years to acquire a replacement. This article reads them as per the Income-tax Act, 2025 as amended by the Finance Act, 2026; later amendments, rules and notifications should be checked. For advice on a property sale, see our property sale tax advisory.
The gain is not charged under section 67 to the extent it is invested in the new asset in time. If the gain exceeds the cost of the new asset, only the excess is charged, and the new asset's cost is nil (or reduced by the gain) if it is transferred within three years. Gain not used by the filing of the return must be deposited in a specified bank or institution under a notified scheme; unutilised deposits are charged in the year the period expires.
Section 83: transfer of land used for agricultural purposes
Who and what
Section 83(1) applies to an assessee who is an individual or a Hindu undivided family and who has:
- (a) capital gains from the transfer of a capital asset, being land which was used by the assessee, or his parent, or the Hindu undivided family, for agricultural purposes (the original asset) in the two years immediately preceding the date of transfer; and
- (b) within two years after that date, purchased any other land for being used for agricultural purposes (the new asset).
Instead of the gain being charged as income of the tax year of transfer, it is dealt with as follows:
| Case | Treatment |
|---|---|
| (i) Capital gains exceed the cost of the new asset | The excess is charged under section 67. For capital gains arising from the transfer of the new asset within three years of its purchase, the cost is nil |
| (ii) Capital gains are equal to or less than the cost of the new asset | No capital gains are charged under section 67. For capital gains from transfer of the new asset within three years of its purchase, the cost is reduced by the amount of the capital gains |
Example (invented). Lakshmi sells agricultural land that she and her father farmed in the two preceding years, with capital gains of Rs. 8,00,000. Within two years she buys other agricultural land costing Rs. 6,00,000. The gain exceeds the cost of the new land by Rs. 2,00,000, so Rs. 2,00,000 is charged under section 67; the remaining Rs. 6,00,000 is not. If she transfers the new land within three years of buying it, its cost is nil for that computation. Had the new land cost Rs. 10,00,000 instead, no gain would be charged, and if the new land were transferred within three years its cost would be Rs. 10,00,000 – Rs. 8,00,000 = Rs. 2,00,000.
If the gain is not used before the return is filed: section 83(2) to (4)
If the capital gains are not used to purchase the new asset before filing the return of income under section 263, then:
- (a) the unutilised amount must be deposited in a specified bank or institution and utilised as per the scheme notified by the Central Government;
- (b) the deposit must be made before filing the return and not later than the due date applicable to the assessee for filing the return under section 263(1); and
- (c) proof of deposit must be submitted along with the return.
For sub-section (1), the amount already utilised for buying the new asset, plus the deposited amount, is deemed to be the cost of the new asset (sub-section (3)). If the deposited amount is not fully utilised within the period in sub-section (1), the unutilised amount is charged under section 67 as income of the tax year in which two years from the date of transfer of the original asset expire, and the assessee may withdraw it under the scheme (sub-section (4)). The scheme itself is not in the text consulted.
Section 84: compulsory acquisition of land and buildings
Who and what
Section 84(1) applies to an assessee (it does not limit itself to individuals) who has:
- (a) capital gains from the transfer, by way of compulsory acquisition under any law, of a capital asset being land or building or any right in land or building, forming part of an industrial undertaking belonging to him, which was being used by him for the business of that undertaking in the two years immediately preceding the transfer (the original asset); and
- (b) within three years after that date, purchased any other land or building, or any right in any other land or building, or constructed any other building, for shifting or re-establishing the undertaking or setting up another industrial undertaking (the new asset).
The treatment mirrors section 83:
| Case | Treatment |
|---|---|
| (i) Capital gains exceed the cost of the new asset | The excess is charged under section 67. For capital gains from transfer of the new asset within three years of its purchase or construction, the cost is nil |
| (ii) Capital gains are equal to or less than the cost of the new asset | No capital gains are charged under section 67. The cost of the new asset is reduced by the amount of the capital gains for transfers within three years of purchase or construction |
Deposit and failure to utilise: section 84(2) to (4)
The deposit rule is the same as in section 83(2): unutilised gain before filing the return of income under section 263 must be deposited in a specified bank or institution under the notified scheme, before the return and not later than the due date in section 263(1), with proof of deposit filed with the return. The deposited amount plus the amount already utilised is deemed to be the cost of the new asset (sub-section (3)). If the deposit is not fully utilised for the purchase or construction within the period in sub-section (1), the unutilised amount is charged under section 67 as income of the tax year in which three years from the date of transfer expire, and the assessee can withdraw it under the scheme (sub-section (4)).
Example (invented). Crestline Engineering Works has capital gains of Rs. 20,00,000 from a compulsory acquisition of land that formed part of its industrial undertaking. It spends Rs. 15,00,000 on new land and a building within three years, and has deposited Rs. 5,00,000 in the notified scheme. Deemed cost of the new asset = 15,00,000 + 5,00,000 = Rs. 20,00,000, which equals the gain, so no gain is charged at that stage. If Rs. 5,00,000 of the deposit remains unspent when three years from the transfer expire, that Rs. 5,00,000 is charged under section 67 as income of that tax year.
What the two sections have in common, and what differs
| Point | Section 83 | Section 84 |
|---|---|---|
| Who | Individual or Hindu undivided family | Any assessee with an industrial undertaking |
| Original asset | Land used for agriculture by assessee, parent or the family in the two preceding years | Land, building or right in them, part of an industrial undertaking, used for its business in the two preceding years |
| Mode of transfer | Transfer (any) | Compulsory acquisition under any law |
| Period for new asset | Two years after the transfer | Three years after the transfer |
| New asset | Other land for agricultural use | Land or building (or right in it) for shifting, re-establishing or setting up another industrial undertaking |
| Year of charge on unutilised deposit | Year in which two years expire | Year in which three years expire |
Section 89 can extend the time where the compensation for a compulsory acquisition is not received on the date of transfer; it is covered in our article on sections 87 to 89. The related residential house and bond reliefs are in the live notes on section 82 and section 85. To see where the earlier Act's provisions sit, see our capital gains sections mapping.
Need help with a property or land sale?
Whether the land qualifies as "used for agricultural purposes" in the two preceding years, and how to document the deposit before the return is filed, are points to settle before the sale. Our property sale tax advisory team can walk through the dates and amounts with you.
Key takeaways
- Section 83 needs agricultural use in the two preceding years and a purchase of other agricultural land within two years after the transfer.
- Section 84 needs compulsory acquisition of land or buildings of an industrial undertaking and a new asset within three years.
- If the gain exceeds the cost of the new asset, the excess is charged under section 67.
- Unused gain must be deposited under the notified scheme before the return is filed, not later than the due date under section 263(1).
- Unutilised deposits are charged in the year two years (section 83) or three years (section 84) from the transfer expire.
Read next
- Sections 87–89: shifting of industrial undertaking and extension of time
- Section 82: residential house exemption
- Section 85: capital gains bonds
- Capital gains sections mapping
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.