Thank you for reaching out with your query. I’ll do my best to clarify your situation regarding the Long-Term Capital Gains (LTCG) exemption and the Capital Gains Account Scheme (CGAS) based on the details you’ve provided.

To address your question about securing a 100% exemption on the LTCG of approximately INR 30–32 lakhs from selling your shares and mutual funds in December 2025, while purchasing a second-hand flat in Hyderabad in March or April 2025 for INR 75 lakhs via demand draft (DD), let’s break it down step-by-step.

In India, under Section 54F of the Income Tax Act, you can claim an exemption on LTCG arising from the sale of any capital asset (like shares or mutual funds, which are not residential properties) if you reinvest the net sale proceeds into purchasing a residential property. Here’s how this applies to your case:

Timing of Purchase and Sale:

You plan to buy the flat in March or April 2025 and sell your shares and mutual funds in December 2025. For Section 54F exemption, the purchase of the residential property must occur either one year before or two years after the sale of the original asset (shares/mutual funds in your case). Since your flat purchase (March/April 2025) will happen before the sale of your shares/mutual funds (December 2025), it falls within the one-year-prior window, which is permissible under Section 54F.

Full Payment via DD:

You’re paying the entire INR 75 lakhs for the flat via DD at the time of registration in March or April 2025. This is advantageous because, under Section 54F, the exemption is proportional to the amount of net sale proceeds (from the shares/mutual funds) reinvested in the residential property. However, since the sale happens later (December 2025), you’re essentially funding the flat purchase from other resources upfront. The key here is that the law considers the reinvestment of the “net sale proceeds” from the sale, not necessarily the source of funds at the time of purchase. If you can demonstrate that the INR 30–32 lakhs from the December 2025 sale is effectively reinvested (or already accounted for in the flat purchase), you could potentially claim the exemption.

100% Exemption Eligibility:

To get a 100% exemption on the LTCG of INR 30–32 lakhs, the entire net sale proceeds from the sale of shares/mutual funds must be reinvested in the flat. The net sale proceeds mean the sale amount minus any expenses directly related to the sale (e.g., brokerage fees). Since your flat costs INR 75 lakhs, which exceeds the expected LTCG of INR 30–32 lakhs, the full LTCG amount can theoretically be exempt, provided you meet other conditions of Section 54F, such as:

You should not own more than one residential house (other than the new flat) on the date of sale of the shares/mutual funds (December 2025).

You must not sell the new flat within three years of its purchase (i.e., until at least March/April 2028).

If the net sale proceeds are less than INR 30–32 lakhs due to sale expenses, the exemption would be proportional, but given the flat’s cost far exceeds the proceeds, reinvestment isn’t the limiting factor here.

Capital Gains Account Scheme (CGAS):

You’ve asked about opening a separate Capital Gains Account. The CGAS is typically used when you cannot invest the capital gains in a residential property before the due date of filing your income tax return for the financial year in which the sale occurs (e.g., July 31, 2026, for FY 2025-26, assuming no extension). In your case:
The sale happens in December 2025 (FY 2025-26).

You’ve already purchased the flat in March/April 2025, well before the sale and the tax filing deadline.

Since you’ve already invested in the flat before the sale, you don’t need to park the gains in a CGAS to claim the exemption under Section 54F. The CGAS becomes relevant only if the sale proceeds are received first, and you’re unable to reinvest them in a property by the tax filing deadline. In your scenario, the flat purchase precedes the sale, so the CGAS isn’t necessary unless you receive the sale proceeds and decide not to attribute them to the earlier purchase for some reason (which seems unlikely given your plan).

Practical Considerations:

Given that the flat purchase occurs before the sale, tax authorities may ask how the LTCG proceeds were “reinvested” when the payment was made earlier via DD from other funds. To strengthen your case:

– Maintain clear documentation showing the sale proceeds (INR 30–32 lakhs) are retained or adjusted against the flat’s cost in your financial records.

– Consult a chartered accountant to ensure compliance with Section 54F documentation and declaration requirements when filing your return for FY 2025-26 (due in 2026).

Conclusion:

Yes, you can potentially claim a 100% exemption on the LTCG of INR 30–32 lakhs from the sale of shares/mutual funds in December 2025, even though you’re paying INR 75 lakhs via DD for the flat in March/April 2025. The timing aligns with Section 54F’s one-year-prior purchase rule, and the flat’s cost exceeds the LTCG, fulfilling the reinvestment condition. You likely won’t need a Capital Gains Account since the investment precedes the sale. However, to avoid any ambiguity with the tax authorities, I recommend consulting a tax professional to ensure your paperwork and intent are clearly aligned with Section 54F provisions.