# Property Capital Gains (With Indexation)

> Gains on property held for more than 24 months are long-term and taxed at 12.5% without indexation. Resident individuals and HUFs selling property bought before 23 July 2024 can instead pay 20% with indexation, whichever is lower. The sale price is replaced by the stamp-duty value if that is more than 110% of the price, and the gain can be reduced to nil by reinvesting under Sections 54, 54F or 54EC.

Interactive calculator: https://www.industax.com/calculators/property-capital-gains

- **Long-term after:** 24 months
- **LTCG rate:** 12.5% (or 20% indexed)
- **Exemption options:** 54, 54F, 54EC

## Computing the gain

| Step | What to use |
| --- | --- |
| Full value of consideration | Sale price, or stamp-duty value if higher by more than 10% |
| Less: transfer expenses | Brokerage, legal fees |
| Less: cost of acquisition | Purchase price + stamp duty; FMV on 1 April 2001 for older property |
| Less: cost of improvement | Capital improvements after 1 April 2001 |
| = Capital gain | Long-term if held > 24 months |

## Which rate to choose

- Residents with pre-23-July-2024 purchases: compute both and pay the lower
- NRIs and property bought after 23 July 2024: 12.5% without indexation
- Short-term gains: slab rates
- Inherited property: previous owner's cost and holding period count

## Worked example: plot bought in 2012 for ₹25 lakh, sold in FY 2025-26 for ₹85 lakh

1. Without indexation: gain ₹60 lakh × 12.5% = ₹7.5 lakh.
2. With indexation: indexed cost = ₹25 lakh × 376 ÷ 200 (CII 2012-13) = ₹47 lakh; gain ₹38 lakh × 20% = ₹7.6 lakh.
3. The resident seller pays the lower: ₹7.5 lakh (without indexation).

**Result:** Tax ≈ ₹7.8 lakh with cess — or nil with full reinvestment under 54F/54EC.

## FAQs

### How long must I hold property for long-term gains?

More than 24 months from the date of purchase (or allotment, for under-construction property, as held in many cases) to the date of transfer.

### Can I reduce the gain with renovation costs?

Yes, capital improvements such as an extra floor or major structural work count, with bills. Routine repairs and maintenance don't.

### Is TDS deducted when a resident sells property?

Yes, the buyer deducts 1% of the price if it is ₹50 lakh or more. For NRI sellers, TDS is on the gain at 12.5%/30% plus surcharge and cess.

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.