Indexation of Sale of Property under New Regime

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Purchase of Property - 09 July 2011

Purchase Cost - 1872000

Sale of Property - 09 July 2025

Sale Value - 2400000

SDV - 3700000

Whether Indexation benefit can be claimed in New Regime ? 

While filing ITR 2 under New Regime the indexation benefit is not available 

 

Please guide

Replies (3)
Quick Summary
The discussion clarifies the availability of indexation benefits for property sales under the new tax regime. For properties purchased before July 23, 2024, taxpayers have a choice between a 20% LTCG with indexation or a 12.5% LTCG without indexation, allowing them to choose the more tax-efficient option. However, for properties acquired on or after July 23, 2024, indexation is not permitted, and LTCG is taxed at 12.5%. It's also noted that opting for the Section 115BAC new tax regime disallows certain capital gains exemptions like Section 54 reinvestment benefits.

New Regime Status: Indexation relief is fully applicable under the New Tax Regime as a tax-capping mechanism. The ITR utility calculates the final tax based on the lower of 12.5% without indexation vs 20% with indexation.

Valuation Requirement: You must use the SDV of ₹37,00,000 as your sale consideration under Section 50C, as it significantly exceeds your actual sale price of ₹24,00,000.

If you are a resident individual or HUF and have purchased the property before July 23, 2024, then you have two options to compute your capital gain and choose the more beneficial one:
- 20% LTCG with indexation benefit OR
- 12.5% LTCG without indexation benefit

If you have purchased the property on or after July 23, 2024, no indexation benefit is allowed and the LTCG is taxable at 12.5%.

To compute the exact LTCG and tax liability, you need to share details like date of purchase, purchase cost, date of sale, sale consideration and whether you are resident or NRI.

INDEXATION ON PROPERTY SALE AY 2026-27 - TWO DIFFERENT MEANINGS OF "NEW REGIME"

This question comes up often because there are TWO separate "new regime" concepts that apply to property sales, and they are often confused.

  1. BUDGET 2024 AMENDMENT (effective July 23, 2024 - applies to computation of capital gains):

For property acquired BEFORE July 23, 2024: You have a CHOICE when computing LTCG (holding period over 24 months):

  • Option A: 20% tax WITH CII-based indexation (old method)
  • Option B: 12.5% tax WITHOUT indexation

Pick whichever results in lower tax. Many older properties with high appreciation still benefit from the 20%+indexation route.

For property acquired ON OR AFTER July 23, 2024: No choice. Only 12.5% without indexation.

  1. SECTION 115BAC NEW TAX REGIME (the personal income tax slab regime):

If you have opted for the new tax slab regime under Section 115BAC, Section 54 and Section 54F exemptions (reinvestment in new residential property) and Section 54EC (investment in NHAI/REC bonds) are NOT available. These are Chapter VI-A / specific exemptions not applicable under the new regime.

So if you sold property and want to claim Section 54 exemption for reinvestment, you MUST be in the old tax regime for that year.

For a detailed breakdown of LTCG computation for property, the pre/post July 23, 2024 split, and Section 54 eligibility: [capital gains tax India LTCG STCG guide AY 2026-27](https://taxgarden.in/blog/capital-gains-tax-india-ltcg-stcg-ay-2026-27)

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