Capital gains tax when you sell property in India (after the 2024 changes)
Long-term capital gains on property are now taxed at 12.5% without indexation, with a grandfathering option for older properties.
The Union Budget of July 2024 changed how long-term capital gains on property are taxed.
Short-term vs long-term
- Short-term: property held for 24 months or less — gain taxed at your slab rate
- Long-term: held for more than 24 months
Long-term rate
For transfers on or after 23 July 2024, long-term capital gains on property are taxed at 12.5% without indexation.
The grandfathering option
For resident individuals and HUFs, on land or buildings acquired before 23 July 2024, you can compute tax both ways — 12.5% without indexation, or 20% with indexation — and pay the lower amount.
Reducing the tax
- Section 54 and 54EC exemptions
- Add the cost of improvements (with proof) to your cost
Stamp-duty value rule
If you sell below the stamp-duty value by more than the tolerance band, the stamp-duty value may be treated as your sale price.
Worked example
You bought a floor in 2015 for ₹3 Cr and sell it in 2026 for ₹6 Cr.
- Without indexation: gain = ₹3 Cr; tax at 12.5% = ₹37.5 lakh (plus surcharge and cess)
- With indexation (if eligible): the indexed cost will be higher than ₹3 Cr, so the gain is lower, but it is taxed at 20%
Calculate both and choose the lower, if you qualify.
What counts as cost
- Purchase price
- Stamp duty and registration paid at purchase
- Brokerage paid at purchase and at sale
- Documented improvement costs
Inherited property
For inherited property, the cost and holding period of the previous owner are generally used.
Frequently asked questions
Is there TDS on my sale? If you are resident, the buyer deducts 1% under Section 194-IA. If you are an NRI, the buyer deducts higher TDS under Section 195; you can apply for a lower-deduction certificate.
This is a general summary. Get advice from a chartered accountant for your specific sale.
