LTCG on Property After Finance Act 2024: 12.5% Flat Rate Explained
The Finance Act 2024 fundamentally changed long-term capital gains tax on immovable property, moving from 20% with indexation to a flat 12.5% without indexation, while grandfathering resident individuals' pre-23-July-2024 acquisitions with an option to choose the better outcome.
New flat LTCG rate
12.5%
Old rate with indexation
20%
Grandfathering cut-off date
23 Jul 2024
Holding period for LTCG status
24 mo
What the data says
For property sold on or after 23 July 2024, LTCG is taxed at a flat 12.5% with no indexation benefit, applicable to all taxpayers including NRIs on transfers after that date.
For resident individuals and HUFs who acquired the property before 23 July 2024, the law allows a choice between 12.5% without indexation and 20% with indexation, and tax is paid on whichever produces the lower liability.
Worked example: property bought in 2015 for ₹50L (indexed cost approximately ₹85L using CII), sold in 2025 for ₹1.5Cr. Without indexation: 12.5% on gain of ₹1 Cr = ₹12.5L. With indexation: 20% on gain of ₹65L (1.5Cr − 85L) = ₹13L. Here the 12.5% no-indexation option is marginally cheaper, so the taxpayer would choose it.
Run both scenarios instantly and compare the actual liability at /knowledge/calculators/ltcg.
How EstateVeda executes this
Confirm the exact date of transfer, since the flat-rate regime applies to transfers on or after 23 July 2024.
For pre-cutoff resident acquisitions, compute tax under both the 12.5% and 20%-indexed methods and select the lower.
For NRIs, note that the grandfathering choice is not available — the flat 12.5% rate without indexation applies to their transfers after the cutoff.
Factor in Section 54/54F reinvestment exemptions before finalising the tax payable.
Risks we underwrite against
Assuming the old 20%-indexed regime still applies universally will materially misstate tax liability for post-cutoff sales.
NRIs incorrectly claiming the resident grandfathering option can face demand notices at assessment.
EstateVeda verdict
Always compute both methods for pre-23-July-2024 resident acquisitions and select whichever is lower; for all other cases, 12.5% flat without indexation applies.
Frequently asked questions
What is the current LTCG rate on property in India?
A flat 12.5% without indexation applies to property sold on or after 23 July 2024. Resident individuals who bought before that date can alternatively use the old 20%-with-indexation method if it results in lower tax.
Does the grandfathering option apply to NRIs?
No. The 20%-with-indexation grandfathering choice under Finance Act 2024 is available only to resident individuals and HUFs for pre-23-July-2024 acquisitions; NRIs are taxed at the flat 12.5% rate without indexation.
How long must a property be held to qualify as long-term?
Immovable property must be held for more than 24 months to qualify for long-term capital gains treatment; shorter holdings are taxed as short-term capital gains at slab rates.