Capital Gain - New Tax & Section 54

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This discussion clarifies capital gains tax implications for a property purchased in June 2021 and sold in FY 24-25. It addresses the choice between the new 12.5% tax rate (without indexation) and the old 20% rate (with indexation). The user also seeks confirmation on eligibility for reinvestment under Section 54 and whether the reinvested capital gain is calculated with or without indexation.

Ankur Aggarwal

Ankur Aggarwal (Querist)
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07 September 2024 Hi,

I purchased a property in June 2021. It became a long term asset in June 2023. I want to sell it in FY 24-25. As it is purchased before 23 Jul 2024, I get the option to choose taxation as per new rate of 12.5% without indexation or old tax of 20% with indexation. In calculations, I realize that going with new tax is beneficial if i have to go with paying tax, but I want to reinvest the capital gain in purchasing a new property.

A) Am I eligible to reinvest under section 54?

B) If I am taking exemption under section 54, the long term capital gain being reinvested will be as per indexed COA or non-indexed COA ?

Thanks in Advance.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 September 2024 1. Yes.
2. As per your choice, both eligible.

Ankur Aggarwal

Ankur Aggarwal (Querist)
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07 September 2024 Thank you for the reply sir.

But sir if I calculate capital gain as per indexation it may come up lesser than capital gain without indexation.
Say with indexation the CG comes up to 50,00,000 but without indexation it comes up to 65,00,000, then which amount to consider for reinvestment under section 54.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 September 2024 Obviously, with indexation, when it is being reinvested.

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