Quick Answer: Property held for more than 24 months qualifies for Long-Term Capital Gains (LTCG) taxed at 12.5% without indexation (Budget 2024 change — indexation removed for properties purchased after 23 July 2024; grandfathered for earlier purchases with 20%+indexation option). STCG (held ≤24 months) is added to income and taxed at slab rates. Section 54 exemption available if sale proceeds invested in another residential property.
Property Capital Gains — Budget 2024 Changes Explained
Budget 2024 significantly changed property capital gains taxation. The key change: LTCG rate reduced from 20% to 12.5%, but indexation benefit (Cost Inflation Index) was removed for properties bought on or after July 23, 2024. For older properties (pre July 23, 2024), taxpayers can choose the more beneficial of the two methods.
Budget 2024 LTCG Rules
| Property Purchase Date | Options |
|---|---|
| Before July 23, 2024 | Min of: (12.5% without indexation) or (20% with CII indexation) |
| On/after July 23, 2024 | 12.5% without indexation (mandatory) |
| STCG (held ≤ 24 months) | Slab rate |
Frequently Asked Questions
Section 54EC allows LTCG exemption if invested in specified bonds (NHAI, REC) within 6 months of property sale. Maximum ₹50 lakh can be invested. Lock-in is 5 years. These bonds earn ~5.25% interest (taxable). A good alternative if you don't want to buy another property.
Yes, NRIs can claim Section 54 exemption on LTCG from Indian property by investing in another residential property in India. However, TDS on NRI property sales is higher (20% + surcharge), and the exemption must be claimed when filing ITR to get the TDS refund.