Capital Gains Tax Calculator: Property Sale Tax India

Capital gains tax is the tax you pay on the profit earned from selling a property. If you sell a property for more than you bought it for, the difference (profit) is your capital gain, and it is taxable. India has two types: Short-Term Capital Gains (STCG) for properties held less than 24 months, taxed at your income tax slab rate; and Long-Term Capital Gains (LTCG) for properties held more than 24 months, taxed at 20% with indexation benefit or 12.5% without indexation under the new regime (Budget 2024).

The Cost Inflation Index (CII) is published annually by the Government of India to account for inflation when calculating long-term capital gains. It allows you to adjust your purchase price upward (indexed cost) to reflect the effect of inflation, thereby reducing your taxable gain. Indexed Cost = Purchase Price × (CII of sale year / CII of purchase year). For example, if you bought a property for ₹50 lakh in 2014-15 (CII: 240) and sold in 2025-26 (CII: 377), indexed cost = ₹50L × 377/240 = ₹78.54 lakh.

Budget 2024 introduced an alternative LTCG tax regime: 12.5% flat tax WITHOUT indexation benefit. Under the old regime, LTCG on property was taxed at 20% WITH CII indexation. Now taxpayers can choose whichever results in lower tax. For properties purchased long ago (where indexation significantly increases the cost basis), the 20% with indexation may be better. For recent purchases where indexation benefit is minimal, 12.5% without indexation may save tax.

Key exemptions: Section 54 — Reinvest the capital gain in a new residential property within 2 years (or construct within 3 years). Section 54EC — Invest up to ₹50 lakh in specified bonds (NHAI/REC/PFC) within 6 months. Section 54F — If you sell any capital asset (not house property) and reinvest the entire sale proceeds in a residential house. You can also deposit the capital gain in a Capital Gains Account Scheme (CGAS) at a bank if you cannot invest immediately.

Under Section 54, if you sell a residential property and purchase another residential property within 2 years (or construct within 3 years), the capital gains invested in the new property are exempt from tax. The exemption is limited to the amount of capital gain or the cost of the new property, whichever is lower. From AY 2024-25, this exemption is capped at ₹10 crore. If the new property costs less than the capital gain, only the proportionate amount is exempt.

Capital gains tax must be paid in the financial year in which the property transfer occurs. If your total tax liability (including capital gains) exceeds ₹10,000, you must pay advance tax in quarterly installments. For property sales, TDS at 1% is deducted by the buyer under Section 194IA if the sale consideration exceeds ₹50 lakh. The remaining tax is paid through advance tax or self-assessment tax when filing your income tax return.