What is long-term capital gains tax on property?

Long-Term Capital Gains (LTCG) tax on property applies when an immovable property is sold after being held for more than 24 months (2 years). The profit earned from such a sale is called Long-Term Capital Gain (LTCG) and is taxed at a flat rate of 12.5% (without indexation) as per the Finance Act 2024 amendments.

Key LTCG Parameters for Property

• Holding Period: More than 24 months.
• LTCG Tax Rate (post July 23, 2024): 12.5% (without indexation).
• LTCG Tax Rate (for property acquired before July 23, 2024): Option — 20% with indexation OR 12.5% without indexation (whichever is lower).
• Surcharge + Cess: Applicable as per income level.
• Indexed Cost Allowed: Only for property acquired before July 23, 2024 (optional).

Exemptions Available on LTCG from Property

• Section 54: Invest LTCG in new residential house within prescribed time.
• Section 54F: Invest net sale proceeds in new residential house.
• Section 54EC: Invest up to ₹50 lakh in NHAI or REC Capital Gain Bonds.

LTCG tax on property at 12.5% (post July 2024 amendment) is significantly lower than income tax slab rates applicable to short-term gains. With exemptions under Sections 54, 54F, and 54EC, strategic planning can help investors legally reduce or eliminate their LTCG liability.