Educational guide
Capital Gains Tax on Property Sale — Indexation, Exemptions & 54/54F
Selling a property is the most tax-intensive transaction most Indians ever do. Here is the post-Budget-2024 playbook to minimise the bill.
// holding period and rate
Sold within 24 months → STCG, taxed at slab. Sold after 24 months → LTCG. For property purchased on/after 23 Jul 2024: 12.5% flat no indexation. For earlier purchases: pick the lower of 12.5% flat or 20% with CII indexation.
// exemptions to reduce ltcg
Section 54: reinvest LTCG in another residential house — gain becomes tax-free up to the reinvested amount.
Section 54EC: invest up to ₹50 lakh of LTCG in REC/PFC/IRFC bonds within 6 months — locked in for 5 years.
Section 54F: applicable when selling any long-term asset (other than house) and reinvesting net consideration in a house — exempts gain proportionate to the reinvestment.
// tds u/s 194-ia
If the sale consideration is ₹50 lakh or more, the buyer must deduct 1% TDS on the entire consideration (not just the gain) and deposit it via Form 26QB. The seller claims credit for this TDS in their ITR.
// frequently asked questions
Yes — one-time option to invest LTCG in two residential houses is available if the gain does not exceed ₹2 crore. Beyond ₹2 crore, only one house can qualify.