New Delhi, Aug. 31 -- When the government capped capital gains exemption on reinvestment in residential property at Rs.10 crore, the intention was clear: to prevent ultra-rich taxpayers from parking hundreds of crores into palatial houses and escaping tax. But as always with Indian tax law, the devil lies in the details.

On paper, the law seems simple. Sell a house, reinvest the gains into another, and you can claim tax exemption on the gains up to Rs.10 crore. Do the same when you sell other long-term assets and reinvest under Section 54F, and the same Rs.10 crore cap applies. Sounds straightforward, but not so much in real life.

Consider this: A taxpayer sells both a house and some shares and the gains from the house qualify under Sec...