Payotte study · Capital gains

Indexation or 12.5%: the threshold for each year of purchase

Homes bought before 23 July 2024 and sold in 2026-27, from the Income-tax Act, 2025 and the notified Cost Inflation Index.

Computed by Payotte with the same formulas as the capital gains tax calculator; rules read on 2026-10-18.

In short

For a home bought before 23 July 2024 and sold in 2026-27, a resident individual pays the lower of two taxes: 12.5% on the gain without indexation, or 20% on the gain after indexation with the Cost Inflation Index (CII 384 for 2026-27). Indexation is cheaper as long as the sale price has not grown more than a threshold that depends on the year of purchase: 7.09× the purchase price for a home bought in 2005-06, 2.36× for 2015-16, 1.43× for 2022-23. Above that multiple, 12.5% without indexation costs less.

The threshold, year of purchase by year of purchase

Bought inCIIIndexed costIndexation wins below₹50 lakh sold for ₹1 crore
2001-021003.84× the price8.57× the price
a rise of 757%		₹0
20% indexed
2002-031053.66× the price8.09× the price
a rise of 709%		₹0
20% indexed
2003-041093.52× the price7.73× the price
a rise of 673%		₹0
20% indexed
2004-051133.4× the price7.4× the price
a rise of 640%		₹0
20% indexed
2005-061173.28× the price7.09× the price
a rise of 609%		₹0
20% indexed
2006-071223.15× the price6.73× the price
a rise of 573%		₹0
20% indexed
2007-081292.98× the price6.27× the price
a rise of 527%		₹0
20% indexed
2008-091372.8× the price5.81× the price
a rise of 481%		₹0
20% indexed
2009-101482.59× the price5.25× the price
a rise of 425%		₹0
20% indexed
2010-111672.3× the price4.47× the price
a rise of 347%		₹0
20% indexed
2011-121842.09× the price3.9× the price
a rise of 290%		₹0
20% indexed
2012-132001.92× the price3.45× the price
a rise of 245%		₹80,000
20% indexed
2013-142201.75× the price2.99× the price
a rise of 199%		₹2,54,545
20% indexed
2014-152401.6× the price2.6× the price
a rise of 160%		₹4,00,000
20% indexed
2015-162541.51× the price2.36× the price
a rise of 136%		₹4,88,189
20% indexed
2016-172641.45× the price2.21× the price
a rise of 121%		₹5,45,455
20% indexed
2017-182721.41× the price2.1× the price
a rise of 110%		₹5,88,235
20% indexed
2018-192801.37× the price1.99× the price
a rise of 99%		₹6,25,000
12.5%
2019-202891.33× the price1.88× the price
a rise of 88%		₹6,25,000
12.5%
2020-213011.28× the price1.74× the price
a rise of 74%		₹6,25,000
12.5%
2021-223171.21× the price1.56× the price
a rise of 56%		₹6,25,000
12.5%
2022-233311.16× the price1.43× the price
a rise of 43%		₹6,25,000
12.5%
2023-243481.1× the price1.28× the price
a rise of 28%		₹6,25,000
12.5%
2024-25 *3631.06× the price1.15× the price
a rise of 15%		₹6,25,000
12.5%

“Indexation wins below”: if the sale price is less than this multiple of the purchase price, 20% with indexation is the lower tax; above it, 12.5% without indexation is. Sale assumed in 2026-27 (CII 384). * 2024-25: only for a purchase before 23 July 2024. Tax before the surcharge and the 4% health and education cess, which apply the same way to both; exemptions for reinvestment (sections 82, 85, 86) are not taken into account. A home bought before 1 April 2001 uses its cost or fair market value on that date, with the 2001-02 index.

How Payotte computed it

With purchase price C, sale price V and k = CII of the year of sale ÷ CII of the year of purchase, the two taxes are 20% × (V − C × k) and 12.5% × (V − C). They are equal when V ÷ C = (0.20 × k − 0.125) ÷ 0.075. The example column applies the full calculator rules to a ₹50 lakh purchase sold for ₹1 crore on 1 October 2026.

Questions

Who can still choose 20% with indexation?

A resident individual or Hindu undivided family selling land or a building acquired before 23 July 2024. The tax is the lower of the two computations (section 197(3) of the Income-tax Act, 2025).

Is indexation better for a home bought in 2010?

Bought in 2010-11 (CII 167), indexation is cheaper if the sale price is below 4.47× the purchase price, when sold in 2026-27.

What does a ₹50 lakh home sold for ₹1 crore pay?

Bought in 2015-16: ₹4,88,189 (20% on the indexed gain, lower than 12.5% (section 197(3))). Bought in 2005-06: ₹0. Before surcharge and the 4% cess.

General information drawn from the official sources cited and dated on this page. It is not legal, tax or financial advice: for your own situation, ask a licensed professional.

Sources