Capital gains tax on selling property in India (2026): how it is worked out
On this page
- Income-tax Act 2025 - Overview and Transition from the 1961 Act
- Section 67, Income-tax Act 2025 - Capital Gains (successor to Section 45)
- 24-Month Holding Period for Long-Term Capital Asset Status (Property)
- Section 72, Income-tax Act 2025 - Mode of Computation of Capital Gains
- Section 78, Income-tax Act 2025 - Full Value of Consideration (successor to Section 50C)
- CBDT Notification 85/2026 - Cost Inflation Index for FY 2026-27 = 384
- How Is Tax Calculated on Property I Bought Before July 2024?
- Set-off and Carry Forward of Capital Losses on Property
- Advance Tax on Capital Gains from Property
- ITR-2 / ITR-3 Schedule CG - Reporting Capital Gains on Property
Income-tax Act 2025 - Overview and Transition from the 1961 Act
A full rewrite of India's income tax law, replacing the 1961 Act entirely. Assented 21 August 2025, in force since 1 April 2026. Almost every section number changed, which is the biggest source of confusion for property buyers/sellers right now.
- Assented 21 August 2025 (Act No. 30 of 2025); in force from 1 April 2026
- Condenses roughly 800+ sections into 536 sections across 23 chapters, 16 schedules
- Replaces 'Assessment Year'/'Previous Year' with a unified 'Tax Year'
- FY2025-26 returns filed in 2026 are still assessed under the OLD 1961 Act
- Already amended once, by the Finance Act 2026
Income-tax Act, 2025 (Act No. 30 of 2025) · Status: in force · official source
Section 67, Income-tax Act 2025 - Capital Gains (successor to Section 45)
From 1 April 2026 the old Section 45 charge is Section 67. The core rule is unchanged, and it now also folds in the special JDA timing rule that used to be a separate Section 45(5A).
- Confirmed on incometaxindia.gov.in as the 'Capital gains' charging section
- Covers insurance payouts, ULIP gains, stock conversion and JDA share receipts together
- Applies to transfers on or after 1 April 2026
- Computation mechanics moved to a separate Section 72
Section 67, Income-tax Act, 2025 · Status: in force · official source
24-Month Holding Period for Long-Term Capital Asset Status (Property)
Hold a property over 24 months before selling and your gain is 'long-term', with better tax treatment. This has applied since AY2018-19 and was NOT changed by the July 2024 budget reforms.
- Over 24 months held = long-term (LTCG); 24 months or less = short-term (STCG)
- In place since Finance Act 2017 (AY2018-19), down from the earlier 36 months
- CBDT's own Budget 2024-25 FAQ confirms it 'remains the same as earlier i.e. 24 months'
- Listed shares/equity funds use a shorter 12-month threshold instead
Section 2(42A), Income-tax Act 1961 / Section 2, Income-tax Act 2025 · Status: in force · official source
Section 72, Income-tax Act 2025 - Mode of Computation of Capital Gains
The old Section 48 computation formula continues here. The Cost Inflation Index is now defined and annually notified under Section 72(8)(a), confirmed by CBDT's FY2026-27 CII notification.
- Successor to Section 48; same sale price minus cost minus expenses formula
- CII notified annually under Section 72(8)(a)
- Indexation limited to grandfathered pre-23-Jul-2024 land/building held by resident individuals/HUF
- Cost of gifted/inherited property carried over via neighbouring Section 73
Section 72, Income-tax Act 2025 · Status: in force · official source
Section 78, Income-tax Act 2025 - Full Value of Consideration (successor to Section 50C)
Same stamp-duty-value rule as old Section 50C, now Section 78: sale price below SDV gets replaced by SDV for tax, unless within the 10% tolerance band.
- Confirmed successor to Section 50C, including the 110% safe harbour test
- Agreement-date SDV usable with part payment via banking channel
- Valuation Officer reference route preserved for disputed SDV
- Applies to land/building transfers on/after 1 April 2026
Section 78, Income-tax Act 2025 · Status: in force · official source
CBDT Notification 85/2026 - Cost Inflation Index for FY 2026-27 = 384
CII for FY2026-27 (Tax Year 2026-27) is fixed at 384, up from 376. Used to compute indexed cost for grandfathered pre-23-Jul-2024 property sales and other indexation-eligible cases.
- CII for FY2026-27 notified at 384
- Notification No. 85/2026-Income Tax, dated 15 July 2026
- Issued under Section 72(8)(a) of the Income-tax Act 2025
- Relevant mainly to the pre-23-Jul-2024 grandfathering option (see the Section 198 verify record for whether it still applies)
Notification No. 85/2026-Income Tax · Status: in force · official source
How Is Tax Calculated on Property I Bought Before July 2024?
A resident individual/HUF who bought before 23 July 2024 can choose the cheaper of two methods on sale: 12.5% on the plain gain, or 20% on the inflation-adjusted gain. Pay whichever is lower.
- Only for resident individuals/HUF, and only property acquired before 23 July 2024
- Compute both ways - 12.5% no indexation, 20% with indexation - and pay the lower
- This LTCG generally doesn't qualify for the Section 87A nil-tax-up-to-12-lakh rebate
- Whether this choice continues for sales after 1 April 2026 under the new Act is NOT yet confirmed
Section 112(1), second proviso, Income-tax Act 1961 · Status: in force · official source · full answer
Set-off and Carry Forward of Capital Losses on Property
A long-term property loss can only offset long-term gains, not short-term gains or salary/business income. A short-term loss can offset both. Unused losses carry forward 8 years, but only if the return is filed on time.
- Long-term capital loss: set off only against long-term capital gains
- Short-term capital loss: set off against both short-term and long-term gains
- Neither offsets salary, business or other-source income
- Carry-forward (8 assessment years) needs the ITR filed by the original due date
Sections 70, 71, 74, Income-tax Act 1961 · Status: in force · official source
Advance Tax on Capital Gains from Property
If your estimated annual tax exceeds Rs 10,000, you must pay it in instalments during the year. Since property sales are unpredictable, Section 234C waives interest on earlier instalments as long as you pay tax on the gain in the next instalment due.
- Advance tax applies once estimated tax exceeds Rs 10,000
- Instalments: 15% by 15 June, 45% by 15 Sep, 75% by 15 Dec, 100% by 15 March
- Section 234C relief: no interest for earlier shortfall attributable to a capital gain, if paid in the next instalment after the sale
Sections 208, 234C, Income-tax Act 1961 · Status: in force · official source
ITR-2 / ITR-3 Schedule CG - Reporting Capital Gains on Property
Report a property sale in Schedule CG of ITR-2 (no business income) or ITR-3 (with business/professional income, e.g. developers). For FY2024-25 returns, gains had to be split into pre- and post-23-Jul-2024 periods because the rate changed mid-year.
- ITR-2: capital gains, no business/professional income; ITR-3: capital gains WITH business/professional income
- Schedule CG needs purchase/sale dates, sale value, cost, exemptions claimed, and resulting LTCG/STCG
- FY2024-25 (AY2025-26) required splitting gains before/after 23-Jul-2024 - check current instructions for whether this continues
- Also report TDS credited (from Form 16B/26AS/AIS) against the sale
Schedule CG, ITR-2 and ITR-3 · Status: in force · official source
Work out your own numbers
Open the CAPGAIN calculatorsGeneral information for India, not advice on your facts. Where an entry says a point is not yet confirmed under the Income-tax Act 2025, treat it as open.