Property Capital Gains

Take the sale consideration (or stamp duty value if higher under Section 50C) and subtract brokerage, legal fees and society NOC charges. Then deduct cost of acquisition and cost of improvement. Hold the flat over 24 months and it's long-term. For flats bought before 23 July 2024, resident individuals and HUFs can choose between 12.5% without indexation or 20% with indexation; pick whichever gives lower tax. For purchases on or after 23 July 2024, only 12.5% without indexation applies. Holding under 24 months is short-term, taxed at slab rates. Section 54 reinvestment can wipe out the tax entirely.

Yes, but only with a condition. Resident individuals and HUFs who acquired land or building before 23 July 2024 retain the option to compute long-term capital gains using the old method: 20% with CII indexation. The Finance (No. 2) Act, 2024 brought in a parallel regime of 12.5% without indexation. You compute both and pay the lower. For properties bought on or after 23 July 2024, indexation is gone for everyone. Companies, firms and non-residents don't get this dual option even for older properties; they're on the new 12.5% regime. Always run the comparison; in many old property cases, indexation still wins.

Transfer expenses come straight off the sale value: brokerage paid to property agents, advocate fees for sale deed, society transfer or NOC charges, and stamp duty borne by the seller. From the indexed cost side, you can claim cost of acquisition (purchase price plus stamp duty and registration paid at purchase), and cost of improvement, meaning major capital additions like adding a floor, modular kitchen built-in or structural extension. Routine repairs, painting and white-washing don't qualify. Keep all bills and bank statements; the assessing officer often asks for proof during scrutiny, especially if the improvement claim is large.

Section 54 exempts long-term capital gain on sale of a residential house if you reinvest in another residential house in India. You must buy a new house within one year before or two years after the sale, or construct one within three years. From AY 2024-25, the exemption is capped at Rs 10 crore. If gains aren't reinvested before the ITR due date, park the amount in a Capital Gains Account Scheme deposit with a bank to preserve the exemption. From AY 2020-21, you can also claim it across two house properties if total gain is up to Rs 2 crore, available once in a lifetime.

Yes. Section 54EC lets you save long-term capital gains tax by investing in specified bonds issued by REC, PFC, IRFC or NHAI within 6 months from the date of transfer. The exemption is capped at Rs 50 lakh per financial year (and Rs 50 lakh in aggregate across the year of sale and the next year combined). Lock-in is 5 years; selling or pledging before that revives the exemption as taxable. Current coupon is around 5% to 5.25%, taxable as interest in your hands. Many businesses selling commercial property pair Section 54F or 54 with 54EC to neutralise the gain entirely.

For immovable property (land, building, or both), the holding period to become long-term is more than 24 months from the date of acquisition. So 24 months and one day onwards, it qualifies as a long-term capital asset. Date of acquisition is generally the date of allotment letter for under-construction property, registered sale deed for ready property, or possession date in some cases. If you held it for 24 months or less, it's short-term and gains are taxed at your slab rate without any indexation or special exemptions like 54 or 54EC. The 24-month rule replaced the older 36-month threshold from FY 2017-18.

Section 50C is a deeming provision: if the stamp duty value (circle rate) of the property on the date of registration exceeds the actual sale consideration, the stamp duty value is treated as the sale price for computing capital gains. A 10% safe harbour applies, meaning if stamp duty value is within 110% of actual sale price, the actual price is accepted. Beyond that, the higher figure is forced. The seller can object and request valuation by the Departmental Valuation Officer if the stamp duty rate is genuinely above market. Many disputes arise here; always check the latest circle rate before finalising the deal.