Capital Gains Tax on Property

Capital gains tax is the income tax levied on profit when you sell property at a price higher than your purchase cost. Under Indian income tax law, capital gains are classified into two categories: Long-Term Capital Gains (LTCG) for properties held over 2 years, taxed at a flat 20% rate with indexation benefits, and Short-Term Capital Gains (STCG) for properties held up to 2 years, taxed at your applicable income slab rate. Indexation is a crucial tax benefit that adjusts your purchase price upward for inflation, significantly reducing your taxable gain—a property bought at 50 lakhs and sold at 70 lakhs might have only 6 lakhs taxable gain after indexation instead of 20 lakhs. The principal residence exemption allows you to claim full exemption on profit from selling one residential property you lived in. Understanding capital gains taxation is essential for effective tax planning and ensuring you're not unduly burdened by taxes on property sales. This calculator computes your exact tax liability based on holding period and indexation.