Indexation Benefit Availability on Property Purchase Before 23/7/24

Save Share

This query is : Resolved

Quick Summary

If you are a UK resident individual or HUF who purchased land or a building before 23 July 2024 and sell it in the 2025-26 financial year after holding it for at least 24 months, you may be eligible for a choice regarding capital gains tax. You can opt to pay tax at 12.5% on the long-term capital gain calculated without indexation, or 20% on the gain calculated with indexation, whichever results in a lower tax liability. This option is not available to non-residents, companies, firms, or LLPs, and applies only to land or buildings.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

13 May 2026 Whether Indexation benefit is available if Property has been purchased before 23/7/2024 and Sold in Financial Year 25-26

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 May 2026 Yes, provided hold it for at least for TWO years...

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

13 November 2026 Yes, but it is an option, not automatic, and it is limited to certain taxpayers. Adding the conditions to the reply above.

1. Provision: the proviso to Section 112(1) of the Income-tax Act, 1961 (inserted by the Finance (No. 2) Act, 2024) allows a resident individual or HUF who transfers land, building or both acquired before 23 July 2024 to compute tax in two ways and pay the lower:
- 12.5 percent on LTCG computed without indexation; or
- 20 percent on LTCG computed with indexation.

2. Holding period: the property must be held for more than 24 months to be long-term (Section 2(42A)). For a property bought before 23 July 2024 and sold in FY 2025-26, this condition will usually be met, but check the exact dates.

3. Who cannot use it: non-residents, companies, firms and LLPs, and assets other than land or building (for example listed shares, gold or debt funds) do not get this option. They pay 12.5 percent without indexation.

4. Computation for FY 2025-26: indexed cost = cost multiplied by CII of the year of sale (376 for FY 2025-26) divided by CII of the year of purchase (or of 2001-02 if bought earlier). The ITR utility computes both options and applies the lower tax.

5. Points to note: the option affects only the tax rate calculation; the exemption under Sections 54, 54EC or 54F is still based on the capital gain. A loss computed with indexation cannot be created to carry forward when the gain without indexation is positive.

Overall Summary: For a resident individual or HUF, land or building bought before 23 July 2024 and sold in FY 2025-26 after 24 months gets the choice of 20 percent with indexation or 12.5 percent without it, whichever gives lower tax.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now