1. What is Long-Term Capital Gains Tax?

Long-Term Capital Gains Tax (LTCG) is applicable on profits from the sale of a rental property held for more than 24 months in India. The tax rate is 20% with indexation benefits, which adjust the purchase price for inflation.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• Sale Price — Current selling price of the property
• Indexed Cost of Acquisition — Original purchase price adjusted for inflation using Cost Inflation Index (CII)
• 20% — Fixed tax rate for long-term capital gains in India

Explanation: The equation calculates taxable gains by subtracting inflation-adjusted purchase price from sale price, then applies 20% tax on the profit.

3. Importance of Indexation

Details: Indexation accounts for inflation by adjusting the original purchase price using government-published Cost Inflation Index (CII) values, which reduces taxable gains and thus lowers tax liability.

4. Using the Calculator

Tips: Enter the current sale price and the indexed cost of acquisition (original price × CII of sale year / CII of purchase year). Both values must be in INR.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies as long-term for rental property?
A: Property held for more than 24 months is considered long-term in India.

Q2: How is indexed cost calculated?
A: Indexed Cost = Original Purchase Price × (CII of Sale Year / CII of Purchase Year)

Q3: Are there any exemptions available?
A: Yes, if reinvested in specified bonds (54EC) or another residential property (54F), subject to conditions.

Q4: What if the property was inherited?
A: For inherited properties, the cost to the previous owner is considered, and indexation applies from the year of original purchase.

Q5: When is the tax payable?
A: The tax must be paid when filing your Income Tax Return for the financial year in which the property was sold.