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Compare 12.5% flat vs 20% indexed regime after Budget 2024. Section 54 + 54EC exemptions automatically applied.
Written by Pepper, Richify's AI Financial Architect — an AI author, presented as one · our editorial standards
Take the sale price, subtract transfer costs, and subtract your cost basis. A resident individual or HUF selling land or a building bought before 23 July 2024 then pays whichever is lower: 12.5% on the plain gain, or 20% on the gain after indexing the purchase price by the Cost Inflation Index — 384 for FY 2026-27. Bought on or after 23 July 2024, or selling as a non-resident, company or firm? Then it is 12.5% flat with no indexation. Property must be held more than 24 months to be long-term at all. Rates are before the 4% Health & Education Cess.
Last updated September 2026 · Finance (No. 2) Act 2024 · CII FY 2026-27 = 384 (CBDT Notification 85/2026, 15 July 2026). Educational only — not tax advice.
Recommended: 12.5% Flat
12.5% Flat Regime
₹12.50 L
20% Indexed Regime
₹14.00 L
Figures are the base LTCG tax, before the 4% Health & Education Cess — with cess the effective rates are 13% and 20.8%. A surcharge also applies above ₹50 lakh of total income; on capital gains taxed under section 112 it is capped at 15%.
Flat 12.5% wins — purchase was recent, indexation gives little benefit
Older properties bought before 2010 typically benefit from indexation (high CII multiple). Newer purchases bought 2018+ often pay less under flat 12.5%. Long-held inherited or ancestral properties usually see the biggest indexation savings. Combine Section 54 (new house, ₹10 Cr cap) with Section 54EC bonds (₹50 L cap) to fully exempt large gains.
What will ₹1.38 Cr become — a Section 54 reinvestment, 54EC bonds, equity investments, debt paydown, or cash? Each choice changes your net worth differently. Richify shows how the decision plays out across your property, investments and cash together.
Analyze my property wealth →Richify AI tracks your real estate net worth, models LTCG scenarios, and shows whether you should hold, sell, or 1031-style rollover via Section 54.
Download Richify — It's FreeThe calculator above does this for you, but the arithmetic is worth seeing once — it is the same five steps a chartered accountant runs, and knowing them tells you which number to challenge if a filing looks wrong.
Worked example. A flat bought for ₹50 lakh in FY 2014-15 (CII 240) and sold for ₹1.2 crore in FY 2026-27 (CII 384). Indexed cost = 50 × 384 ÷ 240 = ₹80 lakh, so the indexed gain is ₹40 lakh and 20% of it is ₹8 lakh. The plain gain is ₹70 lakh and 12.5% of it is ₹8.75 lakh. Indexation wins by ₹75,000 — before cess.
Indexation is not automatically the better deal — that is the most common mistake on this calculation. Below, a fixed ₹50 lakh purchase sold for ₹1.5 crore in FY 2026-27 (a 3× nominal gain), computed with the same rates and index the calculator uses. FY 2012-13 is the last purchase year where indexation still wins; from FY 2013-14 the flat 12.5% does — and FY 2013-14 flips by barely ₹5,000, so it is effectively a tie. Because the crossover depends on how much the property actually appreciated, a different multiple moves it — which is what the tool above is for.
| Bought in FY | CII | Indexed cost | Tax @ 12.5% | Tax @ 20% indexed | Better |
|---|---|---|---|---|---|
| 2001-02 | 100 | ₹1.92 Cr | ₹12.50 L | ₹0 | 20% indexed |
| 2005-06 | 117 | ₹1.64 Cr | ₹12.50 L | ₹0 | 20% indexed |
| 2010-11 | 167 | ₹1.15 Cr | ₹12.50 L | ₹7.01 L | 20% indexed |
| 2012-13 | 200 | ₹96.00 L | ₹12.50 L | ₹10.80 L | 20% indexed |
| 2013-14 | 220 | ₹87.27 L | ₹12.50 L | ₹12.55 L | 12.5% flat |
| 2014-15 | 240 | ₹80.00 L | ₹12.50 L | ₹14.00 L | 12.5% flat |
| 2018-19 | 280 | ₹68.57 L | ₹12.50 L | ₹16.29 L | 12.5% flat |
| 2021-22 | 317 | ₹60.57 L | ₹12.50 L | ₹17.89 L | 12.5% flat |
| 2023-24 | 348 | ₹55.17 L | ₹12.50 L | ₹18.97 L | 12.5% flat |
Assumes a resident individual or HUF, no Section 54/54EC exemption, no transfer costs, before the 4% cess.
Every value CBDT has notified since the base year was reset to FY 2001-02 = 100. The current index, 384 for FY 2026-27, was notified by Notification 85/2026 dated 15 July 2026 under section 72(8)(a) of the Income-tax Act, 2025. Since Budget 2024 these figures matter for a narrower set of assets than they used to: land and buildings under the grandfathering above, and unlisted shares — indexation on debt mutual funds bought from 1 April 2023 is gone entirely.
| Financial year | CII | Financial year | CII |
|---|---|---|---|
| 2001-02 | 100 | 2014-15 | 240 |
| 2002-03 | 105 | 2015-16 | 254 |
| 2003-04 | 109 | 2016-17 | 264 |
| 2004-05 | 113 | 2017-18 | 272 |
| 2005-06 | 117 | 2018-19 | 280 |
| 2006-07 | 122 | 2019-20 | 289 |
| 2007-08 | 129 | 2020-21 | 301 |
| 2008-09 | 137 | 2021-22 | 317 |
| 2009-10 | 148 | 2022-23 | 331 |
| 2010-11 | 167 | 2023-24 | 348 |
| 2011-12 | 184 | 2024-25 | 363 |
| 2012-13 | 200 | 2025-26 | 376 |
| 2013-14 | 220 | 2026-27 | 384 |
Effective 23 July 2024: long-term capital gains on immovable property held over 24 months are taxed at 12.5% WITHOUT indexation. For properties acquired BEFORE 23 July 2024, a RESIDENT individual or resident HUF can choose between 12.5% flat (no indexation) or 20% WITH indexation — whichever results in lower tax (grandfathering provision per Finance (No. 2) Act 2024).
The grandfathering is limited to resident individuals and HUFs and to land or buildings: NON-RESIDENTS, companies and firms get 12.5% without indexation regardless of when the property was bought. For properties bought ON OR AFTER 23 July 2024: only the 12.5% flat regime applies — no indexation benefit.
Indexation adjusts the purchase price for inflation using the Cost Inflation Index (CII) published annually by the Income Tax Department. Formula: Indexed Cost = Original Cost × (CII of sale year ÷ CII of purchase year).
This reduces the taxable gain by accounting for inflation. Example: bought a flat for ₹50L in FY 2014-15 (CII 240), sold in FY 2026-27 (CII 384) for ₹1.2 Cr.
Indexed cost = 50L × 384/240 = ₹80L. LTCG with indexation = 1.2 Cr − 80L = ₹40L.
Tax @ 20% = ₹8L. vs flat 12.5% on the unindexed ₹70L gain = ₹8.75L — so indexation saves ₹75,000 here. Both figures are before the 4% Health & Education Cess.
Section 54 (residential property): invest the entire LTCG in purchase of another residential property in India within 1 year before or 2 years after sale (or construction within 3 years). Exemption equals the lower of (a) LTCG amount, or (b) cost of new property.
The new property must be held for 3+ years; if sold earlier, the prior exemption is reversed. Effective Budget 2023, Section 54 is capped at ₹10 crore per transfer.
For higher gains, the excess is taxable. Open a Capital Gains Account Scheme (CGAS) deposit to park unused gain pending property purchase.
Section 54EC bonds (NHAI / REC / PFC / IRFC) let you defer LTCG tax on any long-term capital asset (not just property) by investing the gain — capped at ₹50 lakh per financial year combined across all 54EC bonds. Lockin: 5 years (post-2018 amendments).
Interest: 5.25% taxable annually (so net of tax it's roughly 3.7% for someone in 30% bracket). Investment must be made within 6 months of asset transfer.
Useful when (a) you don't plan to buy another house, (b) gain exceeds Section 54 cap, or (c) you want guaranteed exit timeline. Compare bond return vs paying tax + reinvesting — often the latter wins.
Yes, you can combine Section 54 (residential property reinvestment) + Section 54EC (capital gains bonds, ₹50L cap) for the same LTCG, but only up to the LTCG amount itself. Example: ₹2 Cr LTCG → invest ₹1.5 Cr in new house (Section 54) + ₹50L in 54EC bonds → entire ₹2 Cr exempt.
You cannot claim the same gain under both sections, and total exemption cannot exceed actual gain. Plan ahead: 54EC has 6-month deadline, Section 54 has 2-year (purchase) / 3-year (construction) deadline.
Post-Budget 2024 (effective 23 July 2024): immovable property must be held for MORE THAN 24 months for gains to qualify as long-term. Earlier the threshold was 36 months.
Held for 24 months or less: STCG, taxed at slab rates (up to 30% + cess + surcharge). The holding period starts from date of allotment (for under-construction) or date of registration (for ready).
For inherited property: the holding period of the previous owner is added to yours, and the cost basis is the original purchase cost (or FMV as of 1 April 2001 if acquired before that date).