Capital Gains Tax on Property Sale
Working out the tax on selling a flat, house or plot in Delhi: holding period, 12.5% or the indexation option, circle-rate rule, exemptions for reinvestment, and the buyer’s TDS.
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Quick answers
What is the tax rate on long-term capital gains from property?
12.5% plus surcharge and 4% cess, without indexation, for transfers on or after 23 July 2024. A resident individual or HUF who acquired the land or building before 23 July 2024 can instead have the tax limited to 20% of the gain computed with indexation, whichever gives less tax.
How can I save capital gains tax on selling a flat?
Buy or build one residential house in India within the time limits (Section 54, now Section 82), invest up to Rs 50 lakh of the gain in specified bonds within six months (Section 54EC, now Section 85), or deposit unused amounts in the Capital Gains Account Scheme before the return due date.
Does the buyer deduct TDS when I sell property?
Yes, if you are resident and the price or the stamp duty value is Rs 50 lakh or more: the buyer deducts 1% and deposits it (Form 141 from 1 April 2026; Form 26QB before that). It is credited against your tax. For an NRI seller, the buyer deducts tax at the full capital gains rate instead.
What our Capital Gains Tax on Property Sale service covers
How the engagement works
How to start
Send these three things first:
- The purchase deed (and allotment letter for a builder flat) with payment details
- The sale agreement or draft sale deed, with the sale price and the stamp duty value
- Your plans for the money: a new house, bonds, or neither
What happens next: The scope and the further documents needed are confirmed in an engagement letter before the computation is finalised.
Documents required
- → Purchase deed / allotment letter and payment receipts
- → Sale deed or agreement to sell, with the stamp duty value
- → Bills for improvement (construction, extension) with dates
- → For inherited property: will, succession or mutation papers and the previous owner’s purchase deed
- → For property held since before 1 April 2001: valuation as on that date
- → Form 26AS / AIS showing the buyer’s TDS
- → New house purchase or construction documents, or bond allotment, if claiming exemption
- → Capital Gains Account Scheme passbook, if a deposit was made
For a specific Capital Gains Tax on Property Sale matter, you may send the details through the contact form, call +91 88022 54567 or write on WhatsApp (Mon–Sat, 10:00 AM–7:00 PM). Please do not send passwords or OTPs.
How capital gains on property are taxed
Short-term or long-term
Land and buildings held for more than 24 months before transfer give a long-term capital gain; up to 24 months, a short-term gain taxed at your slab rate. For inherited or gifted property, the previous owner’s holding period is included, and the cost is the previous owner’s cost. Where the property was acquired before 1 April 2001, its fair market value on that date (not exceeding the stamp duty value on that date) can be taken as the cost.
12.5% or 20% with indexation
For transfers on or after 23 July 2024, long-term gains on property are taxed at 12.5% without indexation (Section 112 of the 1961 Act; Section 197 of the 2025 Act). A resident individual or HUF selling land or a building acquired before 23 July 2024 can have the tax limited to 20% of the gain computed with the Cost Inflation Index: Section 197(3) ignores any tax above that figure. Non-residents, firms and companies do not get this option. The Cost Inflation Index is 384 for Tax Year 2026-27 and was 376 for FY 2025-26; see the CII table.
Worked example
A resident individual bought a flat in Dwarka in FY 2012-13 for Rs 40 lakh (CII 200) and sells it in November 2026 for Rs 1.20 crore, paying Rs 1 lakh brokerage. The stamp duty value is Rs 1.15 crore, so the actual price is used.
| Item | 12.5% without indexation | 20% with indexation |
|---|---|---|
| Sale price less brokerage | Rs 1,19,00,000 | Rs 1,19,00,000 |
| Cost | Rs 40,00,000 | Rs 76,80,000 (40 lakh × 384 / 200) |
| Long-term capital gain | Rs 79,00,000 | Rs 42,20,000 |
| Tax before surcharge and cess | Rs 9,87,500 | Rs 8,44,000 |
Here the indexed method gives less tax, so the tax is limited to Rs 8,44,000 plus surcharge (if total income crosses Rs 50 lakh, at 10%, or 15% above Rs 1 crore; capped at 15% on such gains) and 4% cess. If the seller buys a new house within the time limit, the gain invested in it is exempt, which can reduce the tax to nil. The figures are illustrative; the capital gains calculator runs your own numbers, and the capital gains computation template sets out a working.
Circle rate and the stamp duty value rule
If the sale price is less than the stamp duty value fixed by the State (in Delhi, the circle rate for the locality and category), the stamp duty value is treated as the sale price, unless it is not more than 110% of the actual price (Section 50C; Section 78 of the 2025 Act). Where the agreement and the registration are on different dates and part payment was made by banking channel on or before the agreement, the stamp duty value on the agreement date can be used. The Delhi property stamp duty calculator shows the circle-rate value and stamp duty for a Delhi property.
Exemptions for reinvestment
| Exemption | 1961 Act | 2025 Act | Conditions |
|---|---|---|---|
| House sold, house bought | Section 54 | Section 82 | Individual or HUF; long-term gain on a residential house; buy one house in India 1 year before or 2 years after the sale, or build within 3 years. Exempt amount up to the gain invested, and investment above Rs 10 crore is ignored. Once in a lifetime, two houses may be bought where the gain is up to Rs 2 crore. New house not to be sold within 3 years. |
| Any asset sold, house bought | Section 54F | Section 86 | For a plot, shop or other asset: invest the net sale consideration (not just the gain) in one residential house within the same time limits; proportionate exemption if less is invested. Not available if you own more than one house (other than the new one) on the date of sale. Rs 10 crore cap. |
| Specified bonds | Section 54EC | Section 85 | Long-term gain on land or building invested within 6 months of the sale in notified bonds, up to Rs 50 lakh; 5-year lock-in; interest is taxable. |
Capital Gains Account Scheme: for the house exemptions, any amount not invested before the return is filed must be deposited in the notified scheme account with an authorised bank on or before the return due date, and the proof kept with the return. Amounts not used for the house within the period are taxed as a capital gain in the year the period ends. There is no such deposit route for the bonds: they must be bought within six months.
TDS deducted by the buyer
- Resident seller: the buyer deducts 1% where the total price or the stamp duty value is Rs 50 lakh or more (Section 194-IA up to 31 March 2026; Section 393(1), Table Sl. No. 3(i) from 1 April 2026). It is deposited through Form 26QB (now Form 141) and the certificate is Form 16B (now Form 132). Without the seller’s valid PAN, the rate is 20%. The TDS on property calculator works it out, and the property TDS declaration records the details.
- NRI seller: the buyer deducts tax at the capital gains rate on the full price unless a lower deduction certificate is obtained; see NRI property sale: lower TDS and 15CA/15CB.
Official sources
- Income-tax Act, 2025: Section 197 (tax on long-term capital gains, including sub-section (3))
- Income-tax Act, 2025: Section 78 (stamp duty value as sale price)
- Income-tax Act, 2025 as amended by the Finance Act, 2026 (Sections 82, 85, 86 and 393)
- CBDT Notification No. 85/2026 (Cost Inflation Index 384 for Tax Year 2026-27)
- Finance Act, 2026 (Gazette of India)
Capital Gains Tax on Property Sale for clients in New Delhi & Delhi NCR
SKAG and Associates is a firm of Chartered Accountants based at Kh.No-84, Plot No -RZ-I-1, F/Floor, 12/2, Main Rd, opposite Yammaha Showroom, Mahavir Enclave, New Delhi – 110045. The firm handles Capital Gains Tax on Property Sale work and allied compliance for individuals, professionals, firms and companies across New Delhi, South West Delhi and the wider Delhi NCR region, as well as clients elsewhere in India who engage it remotely.
Engagements are conducted strictly in accordance with the Chartered Accountants Act, 1949 and the ICAI Code of Ethics. To discuss your requirement, you are welcome to contact the office or call +91 88022 54567 during working hours (Mon–Sat, 10:00 AM–7:00 PM).
Frequently asked questions
I bought my flat before 23 July 2024. Which rate applies when I sell now? +
If you are a resident individual or HUF, the tax is the lower of 12.5% on the gain without indexation and 20% on the gain with indexation, under Section 197(3) of the Income-tax Act 2025 (the proviso to Section 112 for earlier years). Compute both and pay the lower.
Can I claim exemption on buying a flat in my spouse’s name? +
The law requires the seller to purchase the new house. Courts have allowed the exemption in some cases where the house was bought in the spouse’s name with the seller’s money, but it is safer to buy in your own name or jointly with the seller as a co-owner.
How much can I invest in 54EC bonds? +
Up to Rs 50 lakh of the long-term capital gain on land or a building, within six months of the sale. The bonds are locked in for five years and their interest is taxable. Under the Income-tax Act 2025 this exemption is in Section 85.
What is the last date to deposit in the Capital Gains Account Scheme? +
The due date for filing your return for the year of sale (for most individuals without a business, 31 July after the end of the year). The deposit must be made before the return is filed, and not later than that due date.
How is capital gains computed on inherited property? +
The cost is the cost to the previous owner (or the fair market value on 1 April 2001 if it was acquired earlier), and the previous owner’s holding period is included. Inheritance itself is not a transfer, so no tax arises until you sell.
The circle rate is higher than the price I actually got. What can I do? +
If the stamp duty value is more than 110% of the price, it is treated as the sale price. You can ask the Assessing Officer to refer the valuation to a Valuation Officer; if the valuation is lower, it is used, and it is never taken higher than the stamp duty value.
Which ITR form do I use after selling a property? +
ITR-2 if you have no business income, or ITR-3 if you do, with the details in Schedule CG: buyer’s name and PAN, property address, sale value, stamp duty value, cost and exemption claimed.
Questions about Capital Gains Tax on Property Sale?
You may contact CA Gaurav Singh to discuss your specific facts and requirements.
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