Capital Gains Tax on Property Sale 2025-26 — House, Flat, Plot & Commercial

Updated: 3 June 2026 | FY 2025-26 (AY 2026-27) | Budget 2024 Rules | LTCG & STCG

When you sell immovable property (house, flat, plot, commercial property) in India, the profit is taxed as capital gains. If held for more than 24 months, it is Long-Term Capital Gain (LTCG) — taxed at 12.5% without indexation (or 20% with indexation if acquired before 23 July 2024 — choose whichever is lower). If held for 24 months or less, it is Short-Term Capital Gain (STCG) — taxed at your income tax slab rate. Exemptions under Section 54, 54F, 54EC can reduce or eliminate LTCG tax.

12.5% LTCG

Capital Gains Tax on Property — LTCG rate from Budget 2024 (FY 2024-25 onwards).
Pre-Jul 23 2024 acquisitions: choose 12.5% no-indexation OR 20% with indexation — whichever is lower. Post-Jul 23 2024: only 12.5%.

Capital Gains Tax Rates — Property (FY 2025-26)

Property Type	Holding Period	Classification	Tax Rate	Exemption Options
Residential house / flat	> 24 months	LTCG	12.5% (no indexation) or 20% with indexation*	Section 54, 54EC
Residential house / flat	≤ 24 months	STCG	As per income slab	None
Plot / land	> 24 months	LTCG	12.5% / 20% with indexation*	Section 54F, 54EC
Plot / land	≤ 24 months	STCG	As per income slab	None
Commercial property	> 24 months	LTCG	12.5% / 20% with indexation*	Section 54F, 54EC
Commercial property	≤ 24 months	STCG	As per income slab	None

* 20% with indexation option only available for properties acquired before 23 July 2024. Properties acquired on/after 23 July 2024: only 12.5% without indexation.

Capital Gains Computation Example

Step	Amount	Notes
Sale price (2024)	₹90,00,000	Actual consideration or stamp duty value, whichever higher (Sec 50C)
Less: Cost of acquisition (2018)	₹50,00,000	Original purchase price
Less: Cost of improvement	₹3,00,000	Documented renovation expenses
Less: Transfer expenses	₹2,00,000	Brokerage, legal fees, stamp duty on sale
Long-Term Capital Gain	₹35,00,000	Held 6 years — LTCG (no indexation chosen)
Tax @ 12.5%	₹4,37,500	Before cess. Add 4% Health & Education Cess = ₹4,55,000 total
If Section 54 claimed	₹0	Full exemption if ₹35L reinvested in new house within 2 years

Section 50C — Stamp Duty Value as Sale Consideration

If the actual sale consideration is less than the stamp duty valuation (circle rate), Section 50C deems the stamp duty value as the sale consideration for capital gains purposes. The 10% tolerance rule: if stamp duty value does not exceed 110% of the actual consideration, the actual consideration is accepted. This provision prevents undervaluation of property transactions.

NRI Property Sale — Special Rules

Aspect	NRI Rule
TDS by buyer	20% (+ surcharge + 4% cess) on full sale consideration under Section 195
Lower TDS certificate	NRI can apply under Section 197 for Nil/lower TDS based on actual gain computation
ITR filing	Mandatory if income/gain exceeds basic exemption — file and claim refund of excess TDS
Section 54 exemption	Available to NRIs — new house must be in India
FEMA repatriation	Repatriation of sale proceeds subject to RBI/FEMA rules — usually max USD 1M per year

Frequently Asked Questions

Is the holding period for property 24 months or 36 months?

For immovable property (house, flat, plot, commercial property), the holding period for long-term classification is MORE than 24 months (2 years) as of Budget 2017. Before FY 2017-18 it was 36 months. So if you sell a property held for more than 24 months, it qualifies as Long-Term Capital Asset (LTCA) and LTCG applies. If held 24 months or less, it is short-term and gains are taxed as per your income tax slab. The 24-month rule applies to land and building — for unlisted shares it remains 24 months, for listed shares it is 12 months.

How is TDS deducted on NRI property sale?

When an NRI sells property in India, the buyer is required to deduct TDS at 20% (plus applicable surcharge and health and education cess of 4%) on the entire sale consideration under Section 195. The buyer must have a TAN and deposit TDS using Form 26QB. The NRI then files an ITR in India, claims Section 54 or other exemptions, and applies for a tax refund if excess TDS was deducted. The NRI can also apply for a Certificate under Section 197 from the Income Tax Officer to authorise the buyer to deduct TDS at a lower or nil rate, based on actual capital gains computation.

What happens when stamp duty value is higher than sale consideration (Section 50C)?

Under Section 50C, if the stamp duty value (circle rate or government guidance value) of the property is higher than the actual sale consideration, the stamp duty value is deemed to be the sale consideration for computing capital gains. However, if the stamp duty value does not exceed 110% of the actual sale price, the actual consideration is accepted. Example: you sell for ₹80L but stamp duty value is ₹85L — since ₹85L is more than 110% of ₹80L (i.e., ₹88L), the actual ₹80L is accepted. But if stamp duty value is ₹95L, capital gains will be computed on ₹95L. This prevents undervaluation of property sales.

Can I claim Section 54 exemption to reduce capital gains on property sale?

Yes. Section 54 allows full exemption of LTCG if you reinvest the gains in a new residential house within the prescribed time limits. Purchase: 1 year before or 2 years after the sale. Construction: 3 years from sale. Additionally, Section 54EC allows investing up to ₹50 lakh in NHAI/REC bonds within 6 months to claim exemption. Section 54F applies if you sell non-residential property and invest net sale proceeds in a residential house. You can combine 54 and 54EC for partial exemptions. If proceeds cannot be reinvested before ITR deadline, park in Capital Gains Account Scheme (CGAS).

Should I choose 12.5% without indexation or 20% with indexation for property sold after July 2024?

Budget 2024 changed LTCG on property to 12.5% without indexation for sales on or after 23 July 2024. However, a grandfathering clause applies: if you acquired the property BEFORE 23 July 2024, you can choose between (a) 12.5% without indexation or (b) 20% with indexation — and pay whichever is LOWER. Use a calculator: for property bought long ago, indexation often results in lower tax. For recently bought property where price appreciation was modest, 12.5% without indexation may be better. For properties acquired ON or AFTER 23 July 2024, only 12.5% without indexation applies — no choice.

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