Can I still use indexation when I sell a property bought before 23 July 2024?

The choice comes from the proviso to section 112(1) of the Income-tax Act, 1961 (now section 197 of the Income-tax Act, 2025), and indexation itself from section 48 (now section 72). It carries over to sales from 1 April 2026 under the 2025 Act.

Who gets the choice

All four conditions must be met:

1. The seller is a resident individual or HUF.
2. The asset is land, a building, or both.
3. It was acquired before 23 July 2024.
4. The gain is long-term: held for more than 24 months.

Everyone else, including companies, firms, LLPs and non-residents, pays 12.5% without indexation on long-term gains from property transferred on or after 23 July 2024.

How the comparison works

Compute the gain twice:

• Option A: sale price minus actual cost, taxed at 12.5%.
• Option B: sale price minus indexed cost (cost × CII of the year of sale ÷ CII of the year of purchase, or of 2001-02 for property bought earlier), taxed at 20%.

You pay the lower of the two, plus surcharge and cess.

Example. A flat bought in FY 2010-11 for ₹30 lakh (CII 167) is sold in FY 2025-26 (CII 376) for ₹1.2 crore.

• Option A: gain ₹90 lakh × 12.5% = ₹11.25 lakh.
• Option B: indexed cost ₹30 lakh × 376 ÷ 167 = ₹67.54 lakh; gain ₹52.46 lakh × 20% = ₹10.49 lakh.

Option B is lower here, so tax is about ₹10.49 lakh before cess. As a rule, indexation helps more the older the property and the smaller the price rise compared with inflation.

Points to watch

• The choice only lowers the tax. A loss worked out with indexation cannot be set off or carried forward.
• For property inherited or gifted, the date the previous owner acquired it decides eligibility, and the cost is the previous owner's cost.
• Exemptions under sections 54 and 54EC of the 1961 Act (now sections 82 and 85 of the 2025 Act) still apply to reduce the gain.

Work out both options with the property capital gains calculator. Current Cost Inflation Index values are in our rates and tables.