A gain on selling land or a building held for more than 24 months is a long-term capital gain (LTCG); held for 24 months or less, it is short-term (STCG). Short-term gains are added to income and taxed at slab rates. Long-term gains are taxed at 12.5% without indexation for sales from 23 July 2024, with an option of 20% with indexation for resident individuals and HUFs on property bought before that date.
Side by side
Factor
LTCG
STCG
Holding period
More than 24 months
24 months or less
Rate
12.5% without indexation; 20% with indexation as an option in some cases
Your slab rate
Indexation
Only under the option for resident individuals and HUFs on property bought before 23 July 2024
No
Reinvestment exemptions
Available for a new home or specified bonds, within limits
Not available
Cess and surcharge
Added
Added
Stamp duty value rule
Applies
Applies
When LTCG matters
Holding past 24 months can lower the tax and opens up the reinvestment exemptions.
When STCG matters
Selling within 24 months means the gain is taxed with your income; check whether waiting is worth it.
In more detail
These rules were made under the Income-tax Act, 1961 and amended by the Finance (No. 2) Act, 2024. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026 and renumbered its sections, so section numbers in older articles may no longer match.
For property received by gift or inheritance, the previous owner's holding period and cost count. The capital gains guide covers the calculation and the exemptions in more detail.
When the land or building has been held for more than 24 months.
Is indexation still available?
Only as an option for resident individuals and HUFs selling land or buildings bought before 23 July 2024, at 20% with indexation instead of 12.5% without.
Can I avoid tax on a short-term gain by buying another house?
The reinvestment exemptions apply to long-term gains, not short-term ones.
Sources
Finance (No. 2) Act, 2024
Income-tax Act, 2025 (in force from 1 April 2026, replacing the Income-tax Act, 1961)
Confirm with a chartered accountant before you act; tax rules are amended by each Finance Act.
A plain-language summary, not legal or tax advice. Rules set by states differ and change; check the current position for your property.