Selling a house can be a big financial deal, but you should be aware that you might have to pay capital gains tax. Let me tell you what is capital gain tax on property sale? In India, capital gains tax on property sale depends on whether the gains are classified as short-term (STCG) or long-term (LTCG). I have shared more details about it below.
What is Capital Gains on Property Sale?
If you sell a property held for more than 24 months, the profit qualifies as LTCG and is taxed at 20% with indexation benefits. It adjusts the purchase price for inflation using the Cost Inflation Index (CII).
For example, if you bought a house for Rs 50 lakh in 2015 to 16 (CII: 254) and sold it for Rs 1.5 crore in 2023 to 24 (CII: 348), the indexed cost is Rs 50 lakh × (348/254) = Rs 68.5 lakh.
The taxable gain is Rs 1.5 crore to Rs 68.5 lakh = Rs 81.5 lakh, taxed at 20% (Rs 16.3 lakh).
If the property is sold within 24 months, the gain is treated as STCG and added to your annual income, taxed as per your applicable slab rate (up to 30% + cess).
However, you can reduce or avoid this tax through exemptions like Section 54 (reinvest in a new residential property within 1-3 years), Section 54EC (invest in specified bonds within 6 months, up to Rs50 lakh), or Section 54F (buy one residential house if you don’t own more than one). I hope you found this helpful.
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How to Avoid Paying Capital Gains Tax on Inherited Property?
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What is Capital Gain Tax on Property Sale?
priya
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2025-05-24T06:31:33+00:00 2025-05-24T06:31:34+00:00Comment
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