The 2026 seller’s guide — the 12.5% rate, the 20%-with-indexation choice on older purchases, the reinvestment exemptions as renumbered under the new Income-tax Act, capital-gains bonds, TDS, and a worked example on a South Delhi floor.
If you have held the property for more than 24 months, the gain is long-term and is taxed at 12.5% without indexation (plus surcharge and cess). For property acquired before 23 July 2024, resident individuals and HUFs can instead choose the older 20% rate with indexation if that produces a lower tax. Held 24 months or less, the gain is short-term and is taxed at your slab rate. Crucially, the entire long-term tax can often be legally reduced to zero by reinvesting in another residential house or in notified capital-gains bonds — the exemptions that lived in Sections 54, 54EC and 54F of the old Act, carried into the Income-tax Act, 2025 that took effect this April.
Selling a South Delhi floor is usually the largest taxable event of a family’s decade, and 2026 is an unusual year to do it: the Income-tax Act, 1961 has been replaced by the Income-tax Act, 2025, effective 1 April 2026. The substance of capital-gains taxation carries over, but the section numbers you have known for forty years have changed — the residential-reinvestment exemption of old Section 54, for instance, is now Section 84, and old Section 54F is now Section 86. The familiar rules apply for income earned up to 31 March 2026; sales from this financial year fall under the new Act.
Consequently, this guide states the rules in plain terms first and the section labels second. Here is how the tax on your sale is actually computed, and the three legal ways sellers reduce it.
Since the July 2024 reform, sellers of older properties effectively run two computations and pay the lower. The 12.5% path taxes the raw gain; the 20% path inflates your purchase cost using the cost-inflation index before taxing what remains. As a rule of thumb, the longer ago you bought and the more modest the appreciation, the more indexation helps; on steep South Delhi appreciation, the flat 12.5% often wins.
| Computation | Path A — 12.5% flat | Path B — 20% with indexation |
|---|---|---|
| Sale consideration | ₹10,00,00,000 | ₹10,00,00,000 |
| Cost of acquisition | ₹4,00,00,000 (actual) | ≈ ₹6,40,00,000 (indexed at CII 384/240) |
| Taxable long-term gain | ₹6,00,00,000 | ≈ ₹3,60,00,000 |
| Tax before surcharge/cess | ₹75,00,000 | ≈ ₹72,00,000 |
In this illustration, the indexation path edges ahead by about ₹3 lakh — but steepen the appreciation, or shorten the holding period, and the flat 12.5% path wins instead. Run both, every time. (Indexed at the notified cost-inflation index: 384 for FY 2026-27 against 240 for FY 2014-15.)
You cannot shrink the gain by under-declaring. If the deed value falls materially below the circle-rate value, tax law substitutes the circle value as your deemed sale price — and taxes the buyer on the discount too. In South Delhi the market runs far above circle rates anyway, as we explain in circle rate vs market rate in Delhi — declare the real price and plan the tax properly instead.
Buy another residential house in India within one year before or two years after the sale — or construct one within three years — and the long-term gain is exempt to the extent reinvested, capped at ₹10 crore. Many of our sellers roll a Defence Colony exit straight into a larger floor from our best residential areas guide and pay no LTCG at all. If the new purchase is not complete before your return-filing date, park the gain in a Capital Gains Account Scheme deposit to preserve the exemption. Sell the new house within three years, however, and the exemption reverses.
Alternatively, invest the gain — up to ₹50 lakh in a financial year — in notified capital-gains bonds of institutions such as REC, PFC or IRFC within six months of the sale. The bonds lock in for five years and pay modest interest, but the invested gain escapes tax entirely. On large South Delhi gains this shelters only a slice, so it usually works alongside, not instead of, the house route.
When the asset sold is not a residential house — a plot, a shop, listed shares — reinvesting the entire sale proceeds in one residential house exempts the gain proportionately, again within the ₹10 crore framework. This is the route plot-sellers use when a builder buys their land outright rather than through the collaboration model, which has its own tax timing rules.
The buyer must deduct 1% TDS on any purchase of ₹50 lakh or more and deposit it against your PAN via Form 26QB — you claim it in your return. If you are a non-resident seller, the buyer instead deducts tax on the LTCG-rate basis under the NRI regime, which changes the entire cash flow of the deal. Both sides of that are covered in our NRI guide to South Delhi property.
Good sellers plan the tax before they sign the deal — not in March, when the choices are gone.
Long-term gains (property held over 24 months) are taxed at 12.5% without indexation, plus applicable surcharge and cess. For property acquired before 23 July 2024, resident individuals and HUFs may instead opt for 20% with indexation where that yields lower tax. Short-term gains are taxed at slab rates.
More than 24 months. Sell within 24 months of acquisition and the profit is short-term, taxed at your slab rate with no access to the reinvestment exemptions.
The new Act, effective 1 April 2026, carries the capital-gains framework forward in substance but renumbers the provisions — the residential-reinvestment exemption of old Section 54 is now Section 84, and old Section 54F is now Section 86. Income earned up to 31 March 2026 remains governed by the 1961 Act’s provisions.
Legally, by reinvestment: buy another residential house in India within one year before or two years after the sale (or construct within three years) to exempt the gain up to ₹10 crore, and/or invest up to ₹50 lakh of the gain in notified capital-gains bonds within six months. Timing and documentation decide whether the exemption survives scrutiny.
Since FY 2023-24, the reinvestment exemptions are computed on a new-house cost of at most ₹10 crore; any excess investment earns no additional exemption. On most single-floor South Delhi sales the cap still comfortably covers the gain.
Notified bonds of institutions such as REC, PFC and IRFC that accept up to ₹50 lakh of long-term gains per financial year, invested within six months of sale. They lock in for five years; the invested gain is exempt from LTCG tax.
A designated bank deposit where you park the unutilised gain before your return-filing due date when the new house isn’t yet bought or built. It preserves the exemption while you complete the purchase or construction within the allowed window.
The circle-rate value is substituted as your deemed sale consideration for computing the gain (beyond a small tolerance), and the buyer is separately taxed on the shortfall as deemed income. Undervaluation punishes both sides.
Yes — 1% of the consideration on deals of ₹50 lakh or more, deposited against your PAN via Form 26QB, which you claim as credit in your return. Non-resident sellers face TDS at the capital-gains rate on a much larger base unless a lower-deduction certificate is obtained.
The rate framework is similar, but the buyer’s TDS obligation is far heavier and repatriation rules apply to the proceeds. NRI sellers should read our dedicated NRI guide and obtain a lower-deduction certificate where eligible before closing.
We price the exit, sequence the reinvestment window, and coordinate with your chartered accountant so the gain is planned before the deal is signed.
Tax rules summarised as applicable for sales in FY 2026-27 under the Income-tax Act, 2025, with legacy references to the 1961 Act for familiarity; surcharge and cess apply in addition to the rates stated. Provisions, caps and section numbers can change by Finance Act — verify against the Income Tax Department at incometax.gov.in and take professional advice before acting.
SOUTH DELHI FLOORS
Clean Deals Only · Since 1984
Second-generation consultants for South Delhi’s finest builder floors, farmhouses and independent homes. Four decades of clean, verified transactions.
+91 99990 04511Explore
Prime Localities
Enquire Now
Tell us what you are looking for and a senior consultant will get back to you.
Owning a home is a keystone of wealth… both financial affluence and emotional security.
Please enter the 6-digit OTP sent to your email.
Time remaining: 05:00
