TaxSaral

Section 197 · was Section 112 in the 1961 Act

LTCG on Assets (General) — 12.5%

Long-term capital gains on sale of assets (other than listed equity) are taxed at 12.5% without indexation. Covers unlisted shares, property, gold, and debt mutual funds held for 24+ months (36+ for immovable property).

Who it applies to: Individuals who sell property, gold, debt mutual funds, or unlisted shares after the required holding period.

Key points

  • Holding periods: Property — 24 months (changed from 36 months in 2024 Budget, verify current rules); Gold/jewellery — 24 months; Debt MFs — 24 months.
  • Indexation benefit was removed from July 2024 — cost of acquisition is taken as-is, no inflation adjustment.
  • No threshold exemption like LTCG on equity (Section 198's ₹1.25L). Full gain is taxable at 12.5%.
  • LTCG from property sale can be reinvested in another property (Section 82, formerly 54) or specified bonds (Section 85, formerly 54EC) to claim exemption.

Worked examples

1. Sale of a flat bought 3 years ago

Suresh bought a flat in Bangalore in 2022 for ₹60L. He sells it in 2026 for ₹90L after living in it. Brokerage and registration fees: ₹2L.

Sale consideration:     ₹90,00,000
Less: Transfer costs:  – ₹2,00,000
Net sale consideration: ₹88,00,000

Cost of acquisition:    ₹60,00,000
(No indexation benefit post 2024)

LTCG = ₹88,00,000 – ₹60,00,000 = ₹28,00,000

Tax at 12.5%: ₹28,00,000 × 12.5% = ₹3,50,000
Add 4% cess: ₹3,64,000

Result: Suresh pays ₹3,64,000 in tax on his property sale profit. He can avoid this entirely by reinvesting the ₹28L LTCG into another residential property (Section 82) within 2 years, or into specified bonds within 6 months.

2. Sale of inherited gold jewellery

Anita inherited gold jewellery (valued at ₹3L at time of inheritance in 2018) and sells it for ₹8L in 2026. Held for 8 years — long-term.

Sale price:                ₹8,00,000
Cost (inheritor's cost      
= previous owner's cost):  ₹3,00,000
LTCG:                      ₹5,00,000

Tax: ₹5,00,000 × 12.5% = ₹62,500
Add cess: ₹65,000

Result: Anita pays ₹65,000 on the gold sale. For inherited assets, the cost to the original purchaser (not the market value at inheritance) is used as the base cost — which can sometimes be very low for old gold.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.