Calculating capital gains on sale of property in India — post-July 2024 regime

Capital-gains tax on Indian property was substantially rewritten by the Finance (No. 2) Act, 2024. For every sale registered on or after 23 July 2024, long-term capital gains on land or building are taxed at a flat 12.5% without indexation, replacing the old 20%-with-indexation regime that this page used to describe.

A narrow grandfathering concession survives, but only for resident individuals and HUFs on property acquired before 23 July 2024. NRIs and OCIs do not get that option. This page walks through both calculations, the exemptions, and the TDS that every NRI seller should understand before signing a sale deed.

Short-term vs long-term — still 24 months

For land, buildings, and housing units:

Held 24 months or less from acquisition to transfer → short-term capital gain (STCG).
Held more than 24 months → long-term capital gain (LTCG).

STCG is added to total income and taxed at the applicable slab rate (plus surcharge and cess). LTCG has its own flat rate, set out below.

The "date of acquisition" is the date of registration of the purchase deed, not the date of possession or the date of the Agreement for Sale.

The new default — 12.5% without indexation

For any transfer on or after 23 July 2024, the starting rule is simple:

Long-Term Capital Gain = Sale Consideration
                      − Cost of Acquisition
                      − Cost of Improvement
                      − Transfer Expenses

Tax = 12.5% × LTCG
    + Surcharge (if applicable)
    + 4% Health and Education Cess

No indexation. No CII lookup. No Indexed Cost of Acquisition.

Transfer expenses deductible: brokerage, legal fees directly attributable to the sale, stamp duty paid by the seller on the sale deed, society transfer charges.

Cost of improvement deductible: capital expenditure on the property (extensions, major renovations). Routine maintenance and repairs are not deductible.

The grandfathering choice — residents only

For land or a building acquired before 23 July 2024, a resident individual or HUF can elect to compute tax under either of:

12.5% without indexation (the new default), or
20% with indexation (the pre-amendment regime),

and pay the lower amount. The choice is made asset-by-asset at the time of filing the return.

This choice is not available to:

Non-residents (NRIs, OCIs, foreign nationals).
Companies and firms.
Assets other than land and building (for which indexation was already not restored).
Property acquired on or after 23 July 2024.

So: a resident seller with an old, heavily-appreciated property should run both calculations. An NRI seller has only the new regime to consider.

The indexation formula, for the grandfathering case

If you are eligible and choosing the 20%-with-indexation route:

Indexation Factor = CII of year of sale ÷ CII of year of purchase

Indexed Cost of Acquisition = Actual Purchase Price × Indexation Factor

Indexed LTCG = Sale Consideration
            − Indexed Cost of Acquisition
            − Indexed Cost of Improvement
            − Transfer Expenses

Tax = 20% × Indexed LTCG + surcharge + 4% cess

The current CII table is on our cost inflation index chart page.

Worked example — resident seller, old property

A resident individual bought a flat in November 2010 for ₹35 lakh and sells it in August 2025 for ₹1.40 crore. Cost of improvements in 2015: ₹8 lakh. Brokerage on sale: ₹2.80 lakh.

Route A — 12.5% without indexation:

Cost of Acquisition              35.00
Cost of Improvement               8.00
Transfer Expenses                 2.80
Total Deductions                 45.80

LTCG = 140.00 − 45.80           94.20

Tax = 12.5% × 94.20             11.775
Plus 4% cess                     0.471
Total tax (approx)               12.25  lakh

Route B — 20% with indexation (resident grandfathering):

Using CII 167 (2010-11) and 363 (2024-25 — sale in FY 2025-26 uses the FY 2025-26 CII once notified; illustrative numbers here use the last-notified 363):

Indexation Factor = 363 / 167 = 2.174

Indexed Cost of Acquisition     76.09   (35 × 2.174)
Indexed Cost of Improvement
   (CII 254 for FY 2015-16 →
    363 / 254 = 1.429)          11.43   (8 × 1.429)
Transfer Expenses                2.80
Total Deductions                90.32

Indexed LTCG = 140.00 − 90.32   49.68

Tax = 20% × 49.68               9.936
Plus 4% cess                    0.397
Total tax (approx)             10.33   lakh

Route B is lower here, so a resident would file under the 20%-with-indexation option. An NRI seller on the same facts would have to use Route A and pay ~₹12.25 lakh in tax.

On a lightly-appreciated or recent property, Route A (the new regime) often beats Route B — run the arithmetic both ways.

Reinvestment exemptions — still available

Three exemptions reduce or eliminate LTCG if proceeds are redeployed appropriately. They are available to NRIs on the same footing as residents.

Section 54 — residential house sold, residential house bought

Sell a long-term residential house and reinvest the LTCG (not the full sale price) in one new residential house in India within the prescribed window: 1 year before or 2 years after the sale (3 years after if constructing).
One-time option to buy two houses instead of one, if LTCG is up to ₹2 crore — usable once in a lifetime.
Post-2023 cap: the exemption under Section 54 (and 54F) is capped at ₹10 crore of reinvestment per transaction.
Funds parked between sale and purchase must go into the Capital Gains Account Scheme (CGAS) with a notified bank before the return-filing due date of the year of sale.

Section 54F — any long-term asset sold, residential house bought

Sell any long-term capital asset other than a residential house (e.g., land, shares) and reinvest the net sale consideration (not just the gain) in one residential house in India.
Conditions on not owning more than one other residential house on the date of transfer; restrictions on purchase/construction of additional property within stipulated periods.
Same ₹10 crore reinvestment cap.

Section 54EC — bonds

Invest LTCG (capped at ₹50 lakh per financial year, and ₹50 lakh in aggregate across the year of sale and the succeeding year for the same transaction) in NHAI or REC bonds within 6 months of sale.
Lock-in 5 years. Interest is taxable.

TDS when the seller is an NRI — Section 195

This is where NRI sellers most often lose control of the transaction:

When a resident buys property from a resident: TDS at 1% of sale consideration ≥ ₹50 lakh (Section 194-IA).
When anyone buys property from an NRI seller: TDS under Section 195, at the applicable LTCG / STCG rate plus surcharge and cess on the gross sale consideration — unless the seller obtains a lower deduction certificate from the jurisdictional Assessing Officer under Section 197 (Form 13).

For a long-term sale by an NRI, that works out to roughly 12.5% + surcharge + 4% cess on the entire sale price (not the gain) by default. On a ₹1.4 crore sale, default TDS runs to roughly ₹18–19 lakh, even if the actual capital gain and tax liability is far lower.

The fix is the Form 13 / Section 197 certificate: the NRI seller applies online, declares the computed capital gain, and the AO issues a certificate authorising the buyer to deduct TDS at the lower rate (often the tax on the actual gain). Without the certificate, the NRI is stuck waiting for a refund after filing the return — months of lost liquidity on a large sum.

Plan this step before executing the sale deed, not after.

Surcharge and cess — don't forget

Income-tax surcharge on LTCG applies above certain income thresholds, and the Finance Act 2024 capped the surcharge on LTCG (and STCG on listed securities) at 15% for all taxpayers. A 4% Health and Education Cess applies on the tax plus surcharge.

So an NRI paying 12.5% LTCG in the highest surcharge band ends up at roughly 12.5% × 1.15 × 1.04 ≈ 14.95% effective rate on the gain.

Repatriation after the sale

For the NRI-specific repatriation framework — NRE vs NRO routing, the USD 1 million per FY cap on NRO repatriation, Form 15CA/15CB — see selling property as an NRI and buying and selling property in India.

Quick decision tree

Held 24 months or less? STCG — added to slab income.
Resident individual/HUF selling land or building acquired before 23 July 2024? Run both calculations; file under the lower-tax route.
Anyone else selling long-term land/building? 12.5% without indexation on the gain.
Buying another residential house with the proceeds? Check Section 54 / 54F eligibility — big potential saving.
Not reinvesting in property but want to shelter the gain? Section 54EC bonds, up to ₹50 lakh.
NRI seller? Apply for a Section 197 lower-TDS certificate before the sale, or accept that default TDS will be deducted on the gross consideration.

Summary

Default LTCG rate on Indian property (from 23 July 2024): 12.5% without indexation plus surcharge and cess.
Indexation survives only as a resident-only grandfathering option for property acquired before 23 July 2024.
NRIs compute LTCG under the new regime only; the CII chart matters to them only if they are computing tax for a resident co-owner or for a pre-amendment sale.
Sections 54, 54F, and 54EC reinvestment exemptions continue unchanged in their structure, subject to the ₹10 crore cap on 54 / 54F and ₹50 lakh cap on 54EC.
NRI sellers must manage Section 195 TDS via a Form 13 certificate to avoid large interim cash blockage.

For the CII values used in the indexation route, see cost inflation index chart. For the broader capital-gains framework, see capital gains on property in India.