Capital Gains Tax on Property Sold in India, in Brief
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When property in India is sold at a profit, the difference between the sale price and the original acquisition cost, adjusted in various ways, is generally treated as a capital gain and becomes subject to tax in India. How that gain is taxed depends significantly on how long the property was held before sale, with different treatment applied to shorter and longer holding periods.
For longer held property, the calculation typically allows the original cost to be adjusted for inflation before the gain is worked out, which can meaningfully reduce the taxable amount compared to a simple sale price minus purchase price calculation. Various exemptions also exist for reinvesting proceeds into another property or certain specified financial instruments, subject to conditions and time limits.
For NRI sellers specifically, tax is commonly deducted at source by the buyer at the point of sale, with any adjustment handled afterward through the seller's own tax filing. Because the rules involve several moving parts, including holding period, exemptions, and withholding, working through the calculation with a tax professional familiar with NRI transactions is a common and sensible step.