Selling a flat is not just a transaction; it is a tax event, on a sum large enough that the answer is rarely straightforward. How much you owe turns on two dates: when you bought the flat, and when you sell it. Buy before 23 July 2024, and the Act gives you a choice it no longer gives a buyer today – a lower, inflation-adjusted rate, alongside the newer flat one.
This guide works through a flat bought for ₹80 lakh in 2019 and sold for ₹1.2 crore in 2026: the tax at a flat 12.5%, and at 20% with indexation, using the official inflation table both ways. It then covers what changes if you put the gain into another house or into specified bonds, what your buyer deducts before paying you, and what happens if you sell below the stamp duty value.
None of this is optional paperwork. The tax is due whether or not you use a lawyer or an agent to sell, and the reinvestment exemptions below only work if you meet their deadlines – several of which start running from the date of sale, not the date you get round to filing.
Short-term against long-term
How long you have owned the flat decides which tax applies. Hold it for more than 24 months before you sell and the gain is long-term; sell within 24 months and it is short-term. There is no shorter test for property the way there is for listed shares – the 12-month line in the Act is reserved for listed securities, mutual fund units and zero-coupon bonds, not flats.
A short-term gain on a flat is simply added to your other income and taxed at your slab rate, the same as your salary or business income – there is no special rate for it, unlike a long-term gain. Sell a flat you have held eight months at a ₹20 lakh profit, and that ₹20 lakh sits on top of your salary, taxed at whatever slab it lands in, up to 30% plus cess if you are already in that band. The rest of this guide covers the long-term case, where the harder choices live, and where the worked example below sits.
LTCG: 12.5% flat, or 20% indexed
Long-term capital gains on a flat sold now are taxed at a flat 12.5%, with no allowance for inflation between the year you bought and the year you sold. That is the rate for every seller, resident or not, on any flat bought at any time.
Residents get one more option, and only for property. If you are an individual or a Hindu undivided family, and you bought the flat before 23 July 2024, the Act lets you fall back to the older rule instead: 20% tax, computed on the gain after adjusting your cost for inflation – “indexation” – using the official Cost Inflation Index. You are not asked to choose in advance. The Act works out both figures and lets you ignore whichever tax is higher, so in effect you always pay the lower of the two.
The date that matters is 23 July 2024 itself, not the tax year it fell in – the day the flat, no-indexation rate was introduced, mid-way through a financial year. Buy after that date and only the flat 12.5% applies; there is no indexed alternative left to fall back on.
The official CII table
Indexation scales up what you paid, using a table the Central Board of Direct Taxes publishes every year. The base year is 2001-02, set at 100; every later year’s index measures the rise in urban consumer prices since then, so a higher index means more inflation to adjust for. The board notified 384 for 2026-27 on 15 July 2026.
| Financial year | CII |
|---|---|
| 2001-02 | 100 |
| 2002-03 | 105 |
| 2003-04 | 109 |
| 2004-05 | 113 |
| 2005-06 | 117 |
| 2006-07 | 122 |
| 2007-08 | 129 |
| 2008-09 | 137 |
| 2009-10 | 148 |
| 2010-11 | 167 |
| 2011-12 | 184 |
| 2012-13 | 200 |
| 2013-14 | 220 |
| 2014-15 | 240 |
| 2015-16 | 254 |
| 2016-17 | 264 |
| 2017-18 | 272 |
| 2018-19 | 280 |
| 2019-20 | 289 |
| 2020-21 | 301 |
| 2021-22 | 317 |
| 2022-23 | 331 |
| 2023-24 | 348 |
| 2024-25 | 363 |
| 2025-26 | 376 |
| 2026-27 | 384 |
Our worked example uses 289, for 2019-20, the year of purchase, and 384, for 2026-27, the year of sale – both straight from this table, current as of 10 Sep 2026. A later year’s index is not known in advance; use the one notified for the tax year in which you actually sell.
Bought for ₹80 lakh in 2019, our seller sells for ₹1.2 crore in 2026. The unindexed gain is ₹40 lakh either way; indexation only changes which rate applies to what’s left after adjusting the cost.
₹2.35 lakh saved by comparing
Tax on the same ₹40 lakh gain – a ₹1.2 crore sale less the original ₹80 lakh cost – under each option, cess included. Hover or tab to a bar for the working.
| 12.5%, no indexation | 20%, with indexation | |
|---|---|---|
| Sale price | ₹1,20,00,000 | ₹1,20,00,000 |
| Cost of acquisition | ₹80,00,000 | ₹80,00,000 |
| Indexed cost, CII 384/289 | Not used | ₹1,06,29,758 |
| Taxable gain | ₹40,00,000 | ₹13,70,242 |
| Tax | ₹5,00,000 | ₹2,74,048 |
| Cess at 4% | ₹20,000 | ₹10,962 |
| Total | ₹5,20,000 | ₹2,85,010 |
Reinvesting to avoid the tax
All of the above is what you owe if you keep the money. Put the gain back into another asset within the Act’s deadlines, and some or all of it escapes tax – against either the 12.5% or the 20%-indexed figure, since these exemptions work on the gain itself, not on which rate would otherwise apply to it.
Sale date
Your capital gains, and the TDS your buyer deducts, are fixed from this date. Every deadline below counts from here.
Within 6 months
Last date to invest the gain in NHAI or REC bonds, capped at ₹50 lakh.
By your filing deadline
Deposit any gain not yet reinvested into the capital gains account scheme, to keep the house exemption alive.
Within 2 years
Last date to buy a ready-built house – or up to a year before the sale, looking backward instead.
Within 3 years
Last date to complete construction, if you build instead of buy.
5 years on
Sell the new house, or the bonds, before this and the exemption you claimed is reversed and taxed as income of that later year.
Buying or building a house
Buy another residential house in India within two years of the sale – or up to one year before it – or complete construction of one within three years, and the gain is exempt up to the cost of the new house. Gain more than the new house costs, and only the excess is taxed; gain less, and none of it is. On our worked example’s ₹40 lakh gain – the figure this exemption uses, not the smaller indexed figure, since indexation here is only a way of comparing tax rates, not a change to the gain itself – a new flat costing ₹40 lakh or more clears the whole amount.
Two conditions cap it. Spend more than ₹10 crore on the new house and the exemption stops counting anything above that figure. And if your gain is ₹2 crore or less, you may put it into two houses instead of one – but only once in your life; use that option for one sale and it is gone for every later one.
Bonds instead, within six months
Rather than buy property, you can invest the gain in bonds issued by the National Highways Authority of India or the Rural Electrification Corporation, within six months of the sale. The cap is ₹50 lakh across everything you invest this way, whether from one sale or several, in the year of the sale and the following year combined. Our ₹40 lakh gain fits comfortably inside that cap. The bonds carry a five-year lock-in; sell them, or borrow against them, before five years are up, and the gain you sheltered becomes taxable again, in the year you break the lock-in.
If you can’t reinvest in time
Reinvestment rarely lines up neatly with your tax return. If you have not bought, built or invested the gain by the time you file, deposit the unutilised amount in a specified bank, before your filing deadline, under the capital gains account scheme – and claim the exemption anyway. Whatever you later draw from that account still has to go toward the house or the bonds within the same original deadlines; miss those, and the unused balance becomes taxable in the year the deadline runs out.
The buyer’s 1% TDS
Sell for ₹50 lakh or more – on the price or the stamp duty value, whichever is higher – and your buyer must deduct 1% at source before paying you, under the same rule that applied when you were the one buying. On the ₹1.2 crore sale in the worked example, that is ₹1.2 lakh, withheld from what the buyer pays you and credited to your PAN. It is not an extra tax; it is an advance instalment of whichever of the two figures above you end up owing, set off when you file your return.
If the stamp value is higher
Sell below the stamp duty value and the Act generally taxes you on the stamp duty value instead of the price you actually received – the same figure that decides your buyer’s stamp duty and TDS. Two things soften it. If the stamp value is no more than 110% of your price, the Act uses your price as it stands, with no adjustment. And if the agreement and the registration fall on different dates, you can lock in the stamp value as of the agreement date rather than a later, higher one, provided at least part of the price was paid through a bank or other traceable mode by then. Our guide to guidance value covers how that figure is set and looked up; the same figure governs both your stamp duty and this test.
The 5-year deduction reversal
If you claimed the principal-repayment deduction on this flat’s home loan, selling within five years of the tax year you took possession reverses it: everything you deducted becomes taxable income in the year you sell, on top of the capital gains above. Our guide to home loan tax benefits covers the deduction, and this reversal, in full.
Before you sell
- Work out both LTCG figures if you bought before 23 Jul 2024 – 12.5% flat and 20% indexed – and pay whichever is lower.
- Pull the current year’s CII from the official table before you calculate the indexed option.
- Decide on reinvestment early – bonds need six months, a house needs up to three years.
- Deposit into the capital gains account scheme before you file, if you have not reinvested yet.
- Check your buyer deducts 1% TDS once the price or stamp value reaches ₹50 lakh.
- Check the stamp duty value against your price before you register – it can set your taxable gain, not just your buyer’s duty.
- Ask if the 5-year clawback applies if you claimed the principal deduction on this flat.
Sources, checked 10 Sep 2026. The 24-month short-term line: Income-tax Act, 2025, section 2(101) (Gazette of India, 21 Aug 2025). LTCG at a flat 12.5%, and the resident option for property bought before 23 July 2024 to use 20% with indexation instead: section 197(1) and (3). How capital gains, and indexed cost, are computed: section 72(1), (2) and (8)(a). The 2026-27 Cost Inflation Index of 384, and the full table back to 2001-02: Central Board of Direct Taxes, Notification S.O. 3889(E) of 15 Jul 2026, and the Income Tax Department’s published CII table, both on incometaxindia.gov.in. Reinvestment in a house, its timelines and the ₹10 crore and ₹2 crore caps: section 82. Reinvestment in bonds, the six-month window and the ₹50 lakh cap: section 85. The buyer’s 1% TDS: section 393(1), the same rule set out from the buyer’s side in our guide to the cost of buying a flat. Stamp duty value as the deemed sale price, with the 110% and agreement-date exceptions: section 78(1)–(2). Section numbers under the Income-tax Act, 2025 replace those of the Income-tax Act, 1961 from 1 April 2026. This is a general guide, not tax advice; a chartered accountant can work the figures for your own sale.