How to Avoid Tax on Sale of Property in India?

DS Posted by: Daksh Sinha

• 22 November, 2025

5 Reply

In India, you can avoid the tax on the property by reducing the tax scale and by the use of specific exemptions which are provided under sections 54, 54EC, and 54F of the Income Tax Act, 1961.

Here are some of the points mentioned below which help you to know know to avoid tax on the property sale in India.

Any profits that a person got from the sale of any immovable property, like land, building and etc, are taxable under the capital gains of the Income Tax Act.
The short-term and long-term capital gains depend on the holding time.
Taxpayers can save the long-term capital gains by claiming the tax liability and claiming the exemptions under sections 54, 54EC, and 54B of the Income Tax Act.
By using these sections for the capital gains exemptions, taxpayers can save their tax on the sale of property in India.

Tags : Tax on Sale of Property

Dev Malhotra 29 November, 2025
Capital gain on a sale of property in India can be of two types:
- Short-term capital gains: When the property is sold within 24 months of the purchase, the profit is termed as the short-term capital gains. It is the addition of the total income and is taxed according to the income tax slab.
- long-term capital gains: if the property is sold after 24 months, then the profit will be known for the long-term capital gains, which is taxed at 20% along with many benefits like that taxation, which will help you to lower the taxable gains and adjusted for inflation price.
- JV
  
  Janet Varghese 30 November, 2025
  
  Short Term Capital Gains
  - For the short term capital gains the properties is sold under the 2 years of purchase and the profit is subjected to the short term capital gains tax which will be taxed at the 30% gains.
  Along with it 30% tax is applied with a 4% cess of the total tax liability which makes this an effective rate of the 30.9%.
  
  Long Term Capital Gains
  - The properties which is held for more then 2 years then the long term capital gains applied with an effective rate of 20% and the benefit of the taxation.
  - You will also get an 4% cess which will bring an effective rate of 20.8%.
Reply
Anika Nair 26 November, 2025
To save the tax on the capital gains on the invested amount after selling the land or construction of a house under section 5F:
- You must be a Hindu Undivided Family (HUF) company or, Limited Liability Partnership (LLP).
- The property must be located in India.
- You should purchase the property one or two years before the date of the sale.
- You should not have more than one property on the date of the sale.
- You can claim the full capital gains exemption on the sale of a new property.
- RB
  
  Rohit Bansal 27 November, 2025
  
  Here is the list of the sections to claim the sale of the property in India.
  - Section 54F: You can claim the exemption from the sale of any new house property.
  - Section 54EC: You can claim this exemption to get a specific bond.
  - Section 54B: You can claim this exemption from the sale of urban agricultural land or reinvest in another agricultural land.
  - Section 54D: Capital gains on sale of land for the industrial undertaking.
  - Section 54G: You cannot exemption on the capital gains from shifting industries from urban to rural.
  - Section 54GA: You can get an exemption for capital gains for the shifting industrial undertaking from the urban and economic zones.
Reply
Srikesh Subash 24 November, 2025
Section 54F is applicable only to long-term capital gains. When the sale is used to get a residential house property, then you need to fulfill the conditions given below:
- The exemptions are only available to individuals and HUFs.
- The house that is constructed or the property that you are purchasing should be located in India.
- You have to purchase the house at least 1 year before the date of sale or within 2 years from the date of sale.
- Do not sell the house under 3 years from the date of construction.
- The exemption limit under this section is INR 10 crores.
- On the day of transfer, you do not own more than 1 residential house apart from the new one.
Reply

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