12.5% LTCG Tax Without Indexation May Save More

When you sell a property in India, you can choose between two ways to calculate your long-term capital gains tax.

One way is to adjust the purchase price for inflation (called indexation) and pay a 20% tax on the remaining gain.

The other way is to pay a flat 12.5% tax on the total gain without any adjustment.

A financial advisor, Dev Patel, explained that for properties bought before 23 July 2024 and sold in FY 2025-26, the flat 12.5% tax rate might save you more money, especially if your property's value has increased significantly.

For example, if you bought a property for ₹10 lakh in FY 2017-18 and sold it for ₹28 lakh in FY 2025-26, using indexation would result in a tax of ₹2,83,529, while the flat 12.5% tax rate would result in a tax of ₹2,25,000.

So, the flat rate could be cheaper if your property's value has grown a lot.

However, if you sell your property for less than ₹20.2 lakh, indexation might be the better option.