Property LTCG: indexed vs non-indexed.
Lower tax (you pay this)
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12.5% no indexation
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20% with indexation
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Your breakdown
Updates live as you type| Step | 12.5% no indexation | 20% with indexation |
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What Budget 2024 changed about selling property
For two decades, long-term capital gains on property in India worked one way: hold for more than 24 months, index your purchase cost up using the Cost Inflation Index, and pay 20% on the indexed gain. The July 2024 Budget rewrote this. For transfers on or after 23 July 2024 the headline rate dropped to a flat 12.5%, but indexation was removed. That trade sounds neutral until you do the arithmetic, because indexation often inflates your cost base enough that 20% of a small indexed gain beats 12.5% of a large nominal gain. After loud pushback, the government added a grandfathering clause: for land and buildings acquired before 23 July 2024, individuals and HUFs may compute tax both ways and pay the lower of 12.5% without indexation and 20% with indexation. This tool runs both routes for you and picks the cheaper one.
How the indexed cost is built
Indexation scales your original cost by the ratio of the Cost Inflation Index in the year of sale to the index in the year of purchase. The CBDT notifies the CII every year with 2001-02 set as the base of 100. The index for 2025-26 in this calculator (376) is an estimate pending the official notification, so treat that row as provisional. The mechanic matters: a flat that cost you ₹50 lakh in 2015-16, when the index was 254, has an indexed cost of ₹50 lakh times 376 divided by 254, which works out to about ₹74 lakh. You are then taxed only on the gain above that uplifted figure, not above the raw ₹50 lakh.
A flat bought in 2015-16, sold in 2025-26
Take the default scenario: bought for ₹50 lakh in FY 2015-16, sold for ₹90 lakh in FY 2025-26. Because it was acquired well before July 2024, both routes are open. Watch how indexation flips the result.
The chart makes the point plainly: for a property held a decade where the price merely kept pace with inflation, the older indexed method is still the friend of the seller.
Two ways to wipe out the tax entirely
The rate is only half the planning. Sections 54 and 54F let you reinvest and pay nothing. Section 54 applies when you sell a residential house and buy or build another within the prescribed window, one year before or two years after for a purchase, three years for construction, and the gain to the extent reinvested escapes tax. Section 54EC lets you park up to ₹50 lakh of the gain in NHAI or REC bonds within six months and shelter that slice. If you cannot reinvest before the return due date, the money must sit in a Capital Gains Account Scheme deposit to keep the exemption alive. For many sellers the smartest move is not choosing between 12.5% and 20% at all, but routing the gain into a 54 or 54EC shelter so the question never arises.
Does indexation apply to a property I buy today?
No. Indexation is gone for any property acquired on or after 23 July 2024, so a purchase made now will only ever use the flat 12.5% route. The dual option exists purely as a transition cushion for older holdings.
What counts as the holding period for property?
Immovable property must be held for more than 24 months to qualify as long-term. Sell within 24 months and the gain is short-term, added to your total income and taxed at your slab rate, with no 12.5% or indexation benefit at all.