How One Real Estate Investor Saved Rs 10 Lakh in LTCG Tax with CGAS

Gains from the sale of property in India are taxed under capital gains rules, and the treatment depends on how long the asset is held. If sold within two years of purchase, the profit is treated as short-term capital gains (STCG) and taxed at the individual’s income tax slab rate. No indexation benefit applies in this case. For properties sold after two years, the profit falls under long-term capital gains (LTCG). Under current rules, LTCG on immovable property is taxed at 12.5% without indexation. However, if the property was acquired before 23 July 2024, taxpayers can choose between 20% with indexation or 12.5% without, whichever is more beneficial.

Relief under Section 54 and Section 54F is available to individual taxpayers and Hindu Undivided Families (HUFs) by reinvesting gains in residential property. If reinvestment is not done before the return filing deadline, the Capital Gains Account Scheme (CGAS) allows taxpayers to park unutilised gains and still claim exemption.

In a case study shared by the tax advisory platform Tax Buddy, Ramesh sold his Hyderabad property in May 2024. The sale resulted in a long-term gain of Rs 50 lakh. At the 12.5% rate, his liability was Rs 10.40 lakh. Since he had not reinvested in a new property, Ramesh assumed he would have to pay the tax. He was advised to deposit the amount in the Capital Gains Account Scheme before filing his return. This preserved his exemption and reduced his liability to zero. The scheme gave him up to two years to buy a house or three years to construct one, without rushing into a purchase.

The due date for filing returns this year is 15 September 2025. For those selling property, this date is also the cut-off to secure exemptions if reinvestment has not been made. Depositing gains into CGAS before the deadline ensures compliance and helps avoid an unnecessary tax outgo.

Capital gains rules highlight the importance of timing in tax planning. Losses can be set off and carried forward for up to eight years if the return is filed on time. Missing the filing deadline can mean losing exemption benefits and facing a higher tax bill.