Capital Gains with Indexation
Calculate your Long Term Capital Gains (LTCG) tax liability on property, gold, and other assets using the latest Cost Inflation Index.
Transaction Details
*Excluding Surcharge and Health & Education Cess.
Indexation Breakdown
Pro Tip: Indexation Power
Indexation adjusts your purchase price for inflation, significantly reducing your taxable gain. In this scenario, indexation saved you from paying tax on ₹58,68,263 of your profit.
Understanding Capital Gains & Indexation
When you sell a capital asset like real estate or gold after holding it for a long period (usually more than 24 months for property), the profit is called Long Term Capital Gain (LTCG).
The Indexation Formula
*CII stands for Cost Inflation Index, notified by the Income Tax Department every year.
Why Indexation Matters?
Inflation erodes the value of money over time. If you bought a house for ₹50 Lakhs in 2010 and sold it for ₹1 Crore in 2024, your "real" profit isn't ₹50 Lakhs because ₹50 Lakhs in 2010 was worth much more than ₹50 Lakhs today. Indexation accounts for this by inflating your purchase price to today's value.
Budget 2024 Update
The Union Budget 2024 proposed a new flat rate of 12.5% for LTCG on real estate without indexation. However, for properties bought before July 23, 2024, taxpayers have the option to choose between 20% with indexation or 12.5% without indexation, whichever is lower.
Frequently Asked Questions
What is the holding period for LTCG on property?
For immovable property (land or building), the holding period to qualify as Long Term Capital Gain is 24 months or more.
Can I claim indexation on shares and mutual funds?
Indexation is generally not available for listed equity shares and equity-oriented mutual funds (LTCG is taxed at a flat 12.5% above ₹1.25 Lakh profit). It is primarily used for real estate, gold, and unlisted shares.
What if I inherited the property?
If the property was inherited, the period of holding is calculated from the date the original owner acquired it. The cost of acquisition is also the cost to the original owner.
How can I save tax on Capital Gains?
You can save LTCG tax on property under Section 54 (by buying another residential house) or Section 54EC (by investing in specified bonds like NHAI/REC) within the stipulated time limits.