Capital Gain Tax Provisions (Old vs. New)

Understanding Capital Gains Tax in India (2024-25)

Capital Gains Tax in India refers to the tax levied on profit earned from the sale of capital assets such as land, buildings, shares, and mutual funds. In Budget 2024, the government introduced key changes to how capital gains from real estate (land and buildings) are taxed. This guide explains the old and new tax regime, indexation benefits, and how you can compute your tax liability easily using our calculator.

📜 What Are Capital Gains?

Capital gain is the difference between the purchase price and the sale price of a capital asset. It is classified into two types:

• Short-Term Capital Gain (STCG) – Asset held for less than 2 years (real estate).
• Long-Term Capital Gain (LTCG) – Asset held for more than 2 years.

🔁 What is Indexation?

Indexation is a method of adjusting the purchase price of a capital asset using the Cost Inflation Index (CII), to account for inflation. This effectively reduces the taxable capital gain, lowering your tax burden. For example, a property bought in 2010 for ₹20 lakhs and sold in 2024 for ₹60 lakhs will have its purchase price indexed using CII to reflect inflation over the years.

⚖️ Old vs New Capital Gain Tax Regime

Before July 23, 2024:

• LTCG taxed at 20% with indexation or 12.5% without indexation (your choice).
• Indexation helps reduce the gain and hence tax payable.

After July 23, 2024:

• Indexation benefit is removed.
• Flat 12.5% LTCG tax applies on land and building sales, regardless of holding period.
• This change discourages holding real estate long-term solely for indexation benefits.

📊 How to Calculate Capital Gains?

You can calculate capital gains using the formula:

Capital Gain = Sale Price – Indexed Purchase Price (if eligible)

Or, under the new regime (post-July 2024):

Capital Gain = Sale Price – Actual Purchase Price (no indexation)

Our Capital Gain Calculator on this page automates this for you—just enter your purchase and sale details to get results instantly.

📌 Example Calculation

Scenario: You bought land in 2015 for ₹30,00,000 and sold it in 2024 for ₹70,00,000. Let’s assume:

• CII for 2015 = 254
• CII for 2024 = 348

Indexed Purchase Price = ₹30,00,000 × (348 ÷ 254) = ₹41,10,236

Capital Gain = ₹70,00,000 – ₹41,10,236 = ₹28,89,764

Tax (20%) = ₹5,77,953

Understanding Capital Gains on Property in India

When you sell a property such as land, a flat, commercial space, or a house at a price higher than the original purchase price, the profit earned is called capital gain. This gain is taxable under the Income Tax Act, 1961.

📌 Types of Capital Gains:

• Short-Term Capital Gain (STCG): If the property is sold within 2 years of purchase.
• Long-Term Capital Gain (LTCG): If held for more than 2 years. Eligible for indexation and exemptions (subject to conditions).

🧾 Indexed Cost of Acquisition

Indexation is a method to adjust the purchase cost of the property for inflation using the Cost Inflation Index (CII). This reduces your taxable gain and saves tax.

🔁 Key Exemptions under Indian Tax Laws

• Section 54: Exemption on LTCG from sale of a house property if reinvested in another residential property.
• Section 54EC: Exemption if the capital gain is invested in specified bonds (REC/NHAI) within 6 months.
• Section 54F: For capital gains from sale of land or other assets reinvested in a house.

This calculator considers new tax rules after July 23, 2024, where indexation benefits are no longer applicable for new property purchases, and a flat tax rate is imposed.

❓ Frequently Asked Questions – Capital Gain Tax

What is capital gain tax on land or building?
Capital gain tax is the tax you pay on the profit earned by selling a property like land, house, or building.

How is long-term capital gain (LTCG) calculated?
LTCG = Sale Price - Indexed Cost of Acquisition (if purchased before July 23, 2024).

What changed after July 23, 2024?
Indexation benefit is no longer available for new property purchases. LTCG is taxed flat at 12.5%.

What is indexation in capital gain?
Indexation adjusts the purchase cost based on inflation (CII), reducing taxable gain.

Does this tool apply to shares or mutual funds?
No, this calculator is only for land, plots, house property, and real estate assets—not stocks or funds.