What is capital gains on property?
Also called: LTCG on property, STCG on property, capital gains tax on sale of house, property sale tax
Profit on selling a house, flat or plot is a capital gain, taxed as short-term or long-term depending on how long you held it. Property held for more than 24 months is long-term, taxed at 12.5% without indexation, with a 20%-with-indexation option on older purchases.
Short-term gains, on property held for 24 months or less, are added to your income and taxed at your slab rate. Long-term gains get the flat rate. Since 23 July 2024 that rate is 12.5% without indexation. Resident individuals and HUFs who bought before that date can instead pay 20% on the indexed gain, whichever is lower. The Income-tax Act, 2025, in force since 1 April 2026, carried these rules over. Add surcharge where it applies and 4% cess.
The gain is sale price minus the cost of acquisition, the cost of improvement (a new floor, not repainting) and transfer expenses like brokerage. Stamp duty and registration you paid when buying are part of your cost; keep those receipts. If the stamp duty value on sale is more than 110% of the price you got, the tax department uses the stamp duty value as the sale price. For property bought before 1 April 2001, you can take its fair market value on that date as the cost, but it can't exceed that date's stamp duty value.
For flats bought under construction, the holding period is usually counted from allotment, not registration or possession, and the ITAT has taken this view in several cases. That can turn a gain from short-term to long-term.
Reinvestment reliefs can wipe out the tax: buying another house (the old Section 54, now Section 82), 54EC bonds (now Section 85), or, for gains on land or other assets, the old 54F, now Section 86.
A Hyderabad flat bought in June 2019 for ₹60 lakh sells in August 2026 for ₹95 lakh. At 12.5% without indexation, tax on the ₹35 lakh gain is ₹4.38 lakh plus cess, and the seller should compare that with the 20%-with-indexation option before filing.
Sellers forget to add stamp duty, registration, brokerage and documented improvement costs to their cost, overpaying tax on a gain that's really smaller.
Questions people ask about capital gains on property
Is capital gains tax payable if I sell at a loss?
No tax is due. A long-term capital loss can be carried forward for eight years and set off only against future long-term gains.
Can NRIs choose the 20% with indexation option?
No. The option is limited to resident individuals and HUFs; NRIs pay 12.5% without indexation on long-term gains from property.