Capital Gains Tax on Property Sale#
Types of Capital Gains#
Short-Term Capital Gains (STCG)#
- Property held for less than 24 months
- Taxed as per income tax slab rate
Long-Term Capital Gains (LTCG)#
- Property held for 24 months or more
- Taxed at 20% with indexation benefit
Calculation of Capital Gains#
Capital Gains = Sale Price - (Cost of Acquisition + Improvement Expenses + Transfer Expenses)
Indexation Benefit#
Cost is adjusted using Cost Inflation Index (CII) to account for inflation.
Example#
- Purchase: ₹50 lakh (FY 2012-13)
- Sale: ₹1.5 crore (FY 2026-27)
- Indexed cost: ₹1.02 crore (approx.)
- LTCG: ₹48 lakh
Exemptions Available#
Section 54#
- Reinvest in one residential property
- Capital gains up to ₹2 crore can be exempt
Section 54EC#
- Invest in capital gains bonds (NHAI, REC)
- Maximum: ₹50 lakh
- Lock-in: 5 years
Tax Calculation Example#
| Particulars | Amount (₹) |
|---|---|
| Sale consideration | 1,50,00,000 |
| Indexed cost | 1,02,00,000 |
| LTCG | 48,00,000 |
| Tax @20% | 9,60,000 |
Conclusion#
Proper planning can help reduce capital gains tax significantly.