Tax
LTCG vs STCG on Property: The 24-Month Line
One date decides whether you pay 12.5% or 30% — and whether you can exempt the gain entirely. It is the most consequential number in Indian property tax.
The short answer
More than 24 months → LONG TERM. 12.5%. Exemptions available.
24 months or less → SHORT TERM. Your slab rate, up to 30%. No exemptions at all.
On a ₹50 lakh gain at the top slab: roughly ₹15 lakh versus ₹6.25 lakh — and the long-term gain could be exempted entirely by reinvesting.
For decades, long term capital gains on property were 20%, with indexation — you adjusted your purchase price for inflation, which often cut the taxable gain dramatically.
The Finance (No. 2) Act, 2024 changed that. From 23 July 2024:
• LTCG on property is 12.5%
• Indexation is abolished
• The holding period stays at 24 months
A great deal of the tax content on Indian property websites still describes the old position. It is now wrong for most transactions. Check the date on anything you read — including this page.
The comparison
| Short Term (STCG) | Long Term (LTCG) | |
|---|---|---|
| Holding period | 24 months or less | More than 24 months |
| Tax rate | Added to your income, taxed at your slab rate — up to 30% | 12.5% without indexation |
| Indexation | Never available | Abolished for property acquired on or after 23 July 2024 |
| The grandfathering option | — | Resident individuals & HUFs only. Property acquired before 23 July 2024: pay the lower of 12.5% without indexation, or 20% with indexation. |
| NRIs | Slab rate | 12.5% without indexation. NO grandfathering. |
| Companies, LLPs, firms | Applicable rate | 12.5% without indexation. No grandfathering. |
| Exemptions | NONE. Sections 54, 54F and 54EC do not apply. | Sections 54, 54F, 54EC |
| Surcharge & cess | Applicable | Add 4% cess, plus surcharge at higher incomes |
Every rate above is a base rate. Add 4% Health & Education Cess, plus surcharge where your income crosses the thresholds. The effective rate is higher than the headline.
What the line is actually worth
Same property. Same gain. Two months apart.
₹50 lakh gain. Resident individual, 30% bracket.
- SHORT TERM — sold at 23 months
- Taxed at slab rate (30%)
- ₹15,00,000
- Exemptions
- None available
- LONG TERM — sold at 25 months
- Taxed at 12.5%
- ₹6,25,000
- Or, reinvested under Section 54
- ₹0
- Two months are worth
- ₹8.75L – ₹15L
Sell long term and reinvest in another residential house — Section 54 can exempt the gain completely.
Sell short term, reinvest exactly the same money in exactly the same house — and you get nothing. No exemption exists.
Same house. Same money. Same intention. ₹15 lakh, decided by a calendar.
When your 24 months actually starts
Less obvious than it sounds, and it matters.
For a resale flat, the acquisition date is usually clear — the registered sale deed.
For an under-construction flat, it is genuinely contentious. Is it:
- The date of the allotment letter?
- The date of the agreement for sale?
- The date of possession?
- The date of the registered sale deed?
Courts have looked at this more than once, and the answer is fact-dependent. It can move your holding period by years.
If you bought under construction and are now selling, the date your holding period started is a question for a professional, not for a website.
Get the answer in writing, before you commit. Not after, when it is a problem rather than a decision.
NRIs
The 24-month line applies identically. But an NRI seller:
- Gets no grandfathering option — 12.5% without indexation, always.
- Faces TDS under Section 195, generally on the whole sale consideration rather than the gain.
- Should apply for a Lower Deduction Certificate before agreeing the sale.
The planning — which is mostly just looking at a calendar
- Find your acquisition date. If bought under construction, ask a CA which date actually counts.
- Add 24 months. Add a day. That is the line.
- If your sale would fall before it — wait. Almost nothing is worth the difference.
- If you're reinvesting in another house, waiting may take the tax to zero, not merely halve it.
- If you're a resident who bought before 23 July 2024, have your CA compute both methods.
- If you can't reinvest before your ITR is due, park the gain in a Capital Gains Account Scheme — or lose the exemption.
We have written this against the current position and checked it carefully. But tax turns entirely on your specific facts: your residential status, when you bought, when you sell, which regime you are on, and what else is in your return.
Note also that the Income Tax Act, 2025 now replaces the 1961 Act, and section numbering is changing even where the substance is not. We use the familiar numbers — 54, 54F, 24(b), 80C — because those are what people search for and what CAs still say. Confirm the current section references with your accountant.
Before you sell a property, pay a CA. On a transaction this size it is the best-value fee you will ever pay, and the cost of getting it wrong runs to lakhs.
Frequently asked questions
What is the difference between LTCG and STCG on property?
The holding period. More than 24 months is long term — taxed at 12.5%, with exemptions available under Sections 54, 54F and 54EC. 24 months or less is short term — added to your income and taxed at your slab rate, up to 30%, with no exemptions at all.
How much tax do I save by holding property for 24 months?
On a Rs 50 lakh gain at the 30% slab: roughly Rs 15 lakh as short term, against Rs 6.25 lakh as long term. And if you're reinvesting in another house, Section 54 can take the long-term gain to zero — while the identical short-term gain gets nothing. Two months can be worth Rs 15 lakh.
When does the 24-month holding period start?
From the date of acquisition. For a resale flat that is usually the registered sale deed. For an under-construction flat it is genuinely contentious — allotment, agreement, possession, or sale deed? Courts have considered it more than once and the answer is fact-dependent. Ask your CA before you agree a sale date.
Can I claim exemptions on short term capital gains?
No. Sections 54, 54F and 54EC apply exclusively to long term gains. You could sell short term, reinvest every rupee in another house, and get no exemption at all.
Does the 24-month rule apply to NRIs?
Yes, identically. But an NRI gets no grandfathering option — 12.5% without indexation regardless of when they bought — and the buyer must deduct TDS under Section 195, generally on the whole sale consideration rather than the gain.