# Capital Gains on Property (2026): Complete Guide to LTCG, STCG & Tax Calculation in India

# Introduction

When you sell a property and earn a profit, that profit is called Capital Gain and is taxable under the Income Tax Act. Understanding how LTCG (Long-Term Capital Gain) and STCG (Short-Term Capital Gain) work is essential to avoid excess tax and plan legally.

This guide explains latest rules after 23 July 2024, tax rates, calculation method, and exemptions.


# What is Capital Gain?

Capital Gain is the profit earned on transfer (sale) of a capital asset such as:

  • Land
  • Residential house
  • Commercial property
  • Securities (in some cases)

# It is taxed under the head “Capital Gains”.


# What is a Capital Asset?

A capital asset includes:

  • Property of any kind (land/building)
  • Securities held by FII/AIF
  • Certain ULIPs (where exemption u/s 10(10D) is not available)

# Holding Period: STCG vs LTCG

# Short-Term Capital Asset (STCA)

  • Held for 24 months or less
  • # Gain = STCG

# Long-Term Capital Asset (LTCA)

  • Held for more than 24 months
  • # Gain = LTCG

# Important Note:

  • Before 23-07-2024, the limit was 36 months

# Types of Capital Gains

# Short-Term Capital Gain (STCG)

  • Gain from short-term asset
  • Taxed at normal income tax slab rates

# Long-Term Capital Gain (LTCG)

  • Gain from long-term asset
  • Special tax rates apply

# Tax Rates on Property (Latest 2026)

# LTCG Tax

  • On or after 23-07-2024 → 12.5% (No indexation)
  • On or before 22-07-2024 → 20% (with indexation)

# STCG Tax

  • Taxed as per normal income tax slab

# How to Calculate Capital Gains

# LTCG Calculation Formula

Step 1: Full Sale Value

Step 2: Less: Transfer Expenses (brokerage, etc.)

Step 3: Net Sale Consideration

Step 4: Less: Cost of Acquisition

Step 5: Less: Cost of Improvement

# Result = Capital Gain


# Indexation Rule (Major Change)

# After 23-07-2024

  • No indexation benefit

# Before 23-07-2024

  • Cost adjusted using Cost Inflation Index (CII)

# Grandfathering Provision

Applicable when:

  • Property acquired before 23-07-2024
  • Only for Resident Individual / HUF
  • Only for land or building

# If tax under new rule (12.5%) is higher than old rule (20% with indexation),

then excess tax will not be charged

# Example (Important for Understanding)

  • Purchase (May 2006): ₹84,000
  • Sale (Aug 2024): ₹10,10,000
  • Brokerage: ₹10,000

# Old Method (with indexation)

  • LTCG: ₹7,50,066
  • Tax @20% = ₹1,50,013

# New Method (without indexation)

  • LTCG: ₹9,16,000
  • Tax @12.5% = ₹1,14,500

# Conclusion: New method is better (lower tax)


# Basic Exemption Adjustment

✔ Allowed only to Resident Individual / HUF

✔ First adjust other income, then LTCG

# No deduction allowed under Section 80C to 80U against LTCG

# Exemptions to Save Capital Gains Tax

You can save tax by reinvesting under:

  • Section 54 → Residential house
  • Section 54B → Agricultural land
  • Section 54D → Industrial land/building
  • Section 54EC → Specified bonds
  • Section 54F → Investment in house property
  • Section 54G / 54GA → Industrial shifting
  • Section 54GB → Startup investment

✅ Key Takeaways

✔ Capital Gain depends on holding period (24 months rule)

✔ LTCG tax is 12.5% after 23-07-2024 (no indexation)

✔ STCG taxed as per normal slab

✔ Use Section 54 series to save tax

✔ Compare old vs new method before filing