Post-Budget-2024 rules • verified July 2026

Capital Gains Tax on Property Sale in India 2026

Since 23 July 2024, long-term gains on property are taxed at a flat 12.5% without indexation — but if you bought before that date, you may still choose the old 20%-with-indexation math if it's cheaper. Here are the current rules, the three exemption routes to zero tax, and the circle-rate trap.

LTCG rate (held > 24 months)

12.5%

Plus surcharge (capped at 15%) and 4% cess, without indexation — for transfers on or after 23 July 2024.

Bought before 23 Jul 2024?

Lower of two

Resident individuals and HUFs may pay 20% with indexation instead, whichever is lower. NRIs, companies and firms cannot.

Held ≤ 24 months

Slab rates

Short-term gains are added to your income and taxed at your slab — up to 30% plus surcharge and cess.

Three legal routes to zero tax

Section 54 — sell a house, buy a house

Reinvest the gain in one residential house in India — bought within 1 year before or 2 years after the sale, or built within 3 years. Once in a lifetime you may split into two houses if the gain is up to ₹2 crore. The new-asset cost counted is capped at ₹10 crore, and the new house is locked for 3 years. Individuals and HUFs only.

Section 54EC — capital gains bonds

Invest the gain (up to ₹50 lakh per financial year) in notified REC, PFC, IRFC or HUDCO bonds within 6 months of the sale. Five-year lock-in, non-transferable; interest (around 5.25%, indicative — check current issue terms) is taxable. HUDCO was added from April 2025; NHAI stopped issuing in 2022.

Section 54F — sell a plot, buy a house

For long-term assets other than a house (like a plot of land): full exemption requires reinvesting the entire net sale price in one residential house; otherwise the exemption is proportionate. You must not own more than one other house on the sale date. Same timelines and ₹10 crore cap.

54EC can be combined with 54 or 54F on the same sale. Money not yet reinvested by the ITR due date must go into a Capital Gains Account Scheme deposit to keep the exemption.

The circle-rate trap (Section 50C)

If you sell more than 10% below the government's stamp duty value, that value — not your actual price — is deemed your sale price for capital gains. Within the 10% band your real price stands. Check your state's notified value in our circle-rate guides before fixing a price, and if the notified value overstates the market, you can ask the assessing officer for a Valuation Officer reference — the lower value then applies.

Losses, basic exemption, and the 87A rebate

Long-term capital losses set off only against long-term gains; short-term losses set off against both. Unused losses carry forward 8 years — but only if you file your return by the due date. Resident individuals can absorb any unused basic exemption limit (₹4 lakh in the new regime for FY 2025-26) against property LTCG; non-residents cannot.

The Section 87A rebate does not apply against 12.5% property LTCG under the new regime — the tax is payable even if your total income is under ₹12 lakh. And when you sell, the buyer withholds TDS — 1% for residents, far more for NRIs — which you claim back against this tax in your return.

Frequently asked questions

How long must I hold a house or plot for the gain to be long-term?+

More than 24 months. Sell within 24 months and the profit is short-term capital gain taxed at your income-tax slab rate; beyond 24 months it is LTCG taxed at 12.5%.

What is the LTCG tax rate on property sold today?+

12.5% (plus surcharge and 4% cess) without indexation, for any transfer on or after 23 July 2024. If you are a resident individual or HUF and bought the property before 23 July 2024, you may instead pay 20% with indexation if that works out lower.

Can NRIs use the 20%-with-indexation option?+

No. The lower-of-two-taxes option is only for resident individuals and HUFs. NRIs pay 12.5% without indexation regardless of when they bought the property, and buyers must deduct TDS under Section 195 on the full sale price.

How can I pay zero tax on my property LTCG?+

Reinvest under Section 54 (gains from a house into one new house; two houses once in a lifetime if gains are up to ₹2 crore; ₹10 crore cap), Section 54F (full net sale price of a plot or other asset into a house), or Section 54EC (up to ₹50 lakh into REC/PFC/IRFC/HUDCO bonds within 6 months, 5-year lock-in). Park unutilised money in a Capital Gains Account before the ITR due date.

What if I sell below the government circle rate?+

Under Section 50C, if your sale price is more than 10% below the stamp duty value, the stamp duty value is treated as your sale price for capital gains. Within the 10% band, your actual price is accepted. You can ask for a Valuation Officer's reference if the circle rate overstates market value.

Does the new Income Tax Act 2025 change property capital gains tax?+

No change in substance — rates, the 24-month rule, and all exemption caps continue. From FY 2026-27 the sections are renumbered: professional analyses map Section 54 to 82, 54EC to 85, 54F to 86, and 50C to 78. Budget 2026 also left property capital gains untouched.