KEY TAKEAWAYS
- The Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026. A sale made from that date falls in tax year 2026-27; a sale completed by 31 March 2026 stays under the old Act.
- The rates have not moved: property held more than 24 months is long-term and taxed at 12.5% without indexation. Short-term gains are taxed at your slab rate.
- Resident individuals and HUFs selling land or a building bought before 23 July 2024 can still choose 20% with indexation if it means less tax. The cost inflation index for 2026-27 is 384.
- The exemptions have only been given new numbers: old 54 is now section 82, 54EC is section 85 and 54F is section 86. The ₹10 crore and ₹50 lakh caps are the same.
- For buyers, Form 26QB has become Form 141. From 1 October 2026, an individual buying from an NRI can deduct TDS using their PAN, with no TAN needed.
A new income tax law is the kind of news that makes property owners nervous. Sellers in Bangalore want to know whether the Income-tax Act, 2025 changes what they pay on a flat bought ten or fifteen years ago.
The short answer is that the tax itself has hardly changed. The holding period, the rates, the option for older properties and the exemptions have all been carried into the new Act. What has changed is the section numbers, some terms and the forms.
This guide covers what stays the same, what is new, and a worked example for a typical Bangalore apartment sale. I am a property advisor, not a chartered accountant, so have a CA check your numbers.
The New Act in Brief: One "Tax Year"
The Income-tax Act, 2025 received Presidential assent on 21 August 2025. It came into force on 1 April 2026 and replaces the Income-tax Act, 1961.
The most visible change is the tax year. Under the old law, a sale in the financial year (the "previous year") was assessed in the following "assessment year". The new Act replaces both with one term, so income earned between 1 April 2026 and 31 March 2027 is simply tax year 2026-27.
If you registered the sale deed on or before 31 March 2026, the gain falls in financial year 2025-26 and is reported under the 1961 Act. If you sold, or are selling, from 1 April 2026 onwards, the 2025 Act applies.
What Stays the Same for Property Sellers
On capital gains from property, the following carries over unchanged:
- Holding period: land, a building or a flat held for more than 24 months is a long-term capital asset. Held for 24 months or less, the gain is short-term.
- Short-term gains are added to your income and taxed at your slab rate. Under the new regime the slabs run from nil (up to ₹4 lakh) to 30% (above ₹24 lakh).
- Long-term gains are taxed at 12.5% without indexation, plus any surcharge and 4% health and education cess.
- The older-property option: a resident individual or HUF selling land or a building bought before 23 July 2024 can work out the tax at 20% with indexation as well, and pay whichever is lower. This is now section 197 (old section 112).
- Stamp duty value rule: if the guidance value is more than 10% above your actual sale price, the guidance value is used as your sale consideration. This rule was section 50C and is now section 78.
NRIs should note one point. The 20% with indexation option is available only to resident individuals and HUFs. A non-resident selling a Bangalore flat pays 12.5% on the gain without indexation, whenever they bought it.
Old Section to New Section: A Quick Map
Your CA, bank and bond application will now use the new numbers. These are the ones a property seller is most likely to see.
| What it covers | 1961 Act | 2025 Act |
|---|---|---|
| Capital gains charge | Section 45 | Section 67 |
| Stamp duty value as sale price | Section 50C | Section 78 |
| Cost inflation index notified | Section 48 | Section 72(8)(a) |
| Long-term gains rate (12.5%, or 20% with indexation) | Section 112 | Section 197 |
| Sell a house, buy a house | Section 54 | Section 82 |
| Specified bonds (NHAI, REC etc.) | Section 54EC | Section 85 |
| Sell other assets (e.g. a plot), buy a house | Section 54F | Section 86 |
| TDS on property bought from a resident | Section 194-IA | Section 393(1), Table Sl. No. 3(i) |
| TDS on payments to a non-resident | Section 195 | Section 393(2) |
| Lower or nil TDS certificate | Section 197 | Section 395(1), Form 128 |
| Property TDS challan and certificate | Form 26QB and Form 16B | Form 141 and Form 132 |
| Annual tax statement | Form 26AS | Form 168 |
One trap: "section 197" now means the capital gains rate, but under the old law it meant the lower deduction certificate.
Exemptions: New Numbers, Same Caps
Section 82 (old 54): sell a house, buy a house
If you sell a residential house held for more than 24 months, the long-term gain is exempt to the extent you invest it in another residential house in India. You can buy within one year before or two years after the sale, or construct within three years. If the gain does not exceed ₹2 crore, you may invest in two houses instead of one, but only once in your lifetime. The exemption is capped at ₹10 crore.
Section 86 (old 54F): sell a plot or other asset, buy a house
This applies when you sell something other than a house, such as a site in a BDA layout or commercial space. You must reinvest the net sale consideration, not just the gain, to get the full exemption. Invest less and the exemption is proportionate. The ₹10 crore cap applies here too.
Section 85 (old 54EC): capital gains bonds
If you sell land or a building, you can invest the long-term gain in specified bonds, such as those of NHAI or REC, within six months of the sale. The limit is ₹50 lakh across the year of sale and the following year. The bonds are locked in for five years. Redeem or sell them early and the exempted gain becomes taxable in that year.
The capital gains account
If you have not bought or built the new home before your return is due, deposit the unused amount in a Capital Gains Account Scheme account at an authorised bank before that due date (now set under section 263(1)). Money not used within the time allowed is taxed as a capital gain in the year the period ends. Section 85 bonds cannot use this account.
Worked Example: A Whitefield Flat
Take a resident individual who bought a 2BHK in Whitefield in financial year 2015-16. The total cost, including stamp duty and registration, was ₹60 lakh. They sell it in October 2026 (tax year 2026-27) for ₹1.2 crore and pay ₹1 lakh in transfer expenses such as brokerage. Assume the guidance value is within 10% of the price. The cost inflation index is 254 for 2015-16 and 384 for 2026-27.
| Item | Option 1: 12.5%, no indexation | Option 2: 20% with indexation |
|---|---|---|
| Sale price | ₹1,20,00,000 | ₹1,20,00,000 |
| Less transfer expenses | ₹1,00,000 | ₹1,00,000 |
| Less cost | ₹60,00,000 | ₹90,70,866 (₹60 lakh × 384 ÷ 254) |
| Long-term capital gain | ₹59,00,000 | ₹28,29,134 |
| Tax before surcharge and cess | ₹7,37,500 | ₹5,65,827 |
Here, indexation saves about ₹1.72 lakh before surcharge and cess, so this seller would choose option 2. For a recent purchase, or one whose price rose far faster than inflation, the flat 12.5% can come out lower, so have your CA run both.
The exemptions then apply to the gain. To make the whole ₹28.29 lakh exempt, this seller could buy another home under section 82 for at least that amount, or put ₹28.29 lakh into section 85 bonds within six months.
TDS When You Sell: Residents and NRIs
The buyer must deduct TDS, now under new sections and forms.
- Resident seller: if the consideration is ₹50 lakh or more, the buyer deducts 1% of the sale price or the stamp duty value, whichever is higher. This is now section 393(1). In the example, that is ₹1.2 lakh, which you claim as a credit against your tax.
- Form 141 replaces Form 26QB. It is more detailed, recording each buyer's and seller's share, the stamp duty value and sale price separately, and instalment details. The tax is due within 30 days from the end of the month of deduction, and the buyer must issue Form 132 (formerly 16B) within 15 days after that.
- NRI seller: TDS is under section 393(2) at the rate that applies to the gain, which is 12.5% plus surcharge and cess on long-term gains. A lower deduction certificate under section 395(1) (Form 128), applied for before the sale, can stop the buyer withholding more than the actual tax.
- No TAN for individual buyers from 1 October 2026. Under the Income-tax (Fifth Amendment) Rules, 2026, a resident individual or HUF buying from an NRI can deposit TDS using their PAN through Form 141. Companies, firms and LLPs still need a TAN.
NRIs can read more in our NRI property guide.
What I Tell Sellers to Do Now
- Find your original papers: sale deed, stamp duty and registration receipts, and receipts for major improvements. You must be able to prove your cost.
- Check the guidance value for your property before you agree a price. A sale more than 10% below it triggers section 78. Our khata, tax and EC liaison service can help with the documents.
- Ask your CA to calculate both options if you bought before 23 July 2024 and are a resident.
- Decide on reinvestment early. The six-month window for bonds starts from the sale date, and the capital gains account must be funded before your return is due.
- If you are an NRI, apply for a lower deduction certificate well before the sale and tell your buyer about the new PAN route.
- Check Form 168 (formerly 26AS) after the sale to confirm the buyer's TDS appears against your PAN.
If you are planning a sale in Bangalore and want help with pricing, documents and the buyer side, see how we handle it on our sell your home page.
What to Watch
The Act and the Income-tax Rules, 2026 are new, and the CBDT has already amended the rules more than once this year. The TAN change from 1 October 2026 came through the Fifth Amendment Rules, notified on 22 September 2026. Online commentary on the new section numbers is inconsistent in places. Rely on the bare Act, official CBDT notifications and your CA, not on a blog, including this one.
Disclaimer: this article is general information as of 29 September 2026, not tax or legal advice. Capital gains depend on your residential status, total income, purchase date, documents and exemption choices. Always have a qualified chartered accountant check your computation before you sell, reinvest or file.
Frequently Asked Questions
Does the Income-tax Act, 2025 change the tax rate on selling my Bangalore flat?
No. Long-term gains on property held for more than 24 months are still taxed at 12.5% without indexation, and short-term gains at your slab rate. Only the section numbers and terms have changed.
Can I still use indexation on a flat bought before July 2024?
Yes, if you are a resident individual or HUF and the property was acquired before 23 July 2024. You can compare 20% with indexation against 12.5% without, and pay the lower amount. The cost inflation index for tax year 2026-27 is 384.
What are sections 54, 54EC and 54F called now?
Section 54 is now section 82, section 54EC is section 85, and section 54F is section 86 of the Income-tax Act, 2025. The ₹10 crore cap and the ₹50 lakh bond limit continue.
I sold my property in March 2026. Which law applies?
A sale completed by 31 March 2026 falls in financial year 2025-26 and is governed by the Income-tax Act, 1961. The new Act applies to sales from 1 April 2026.
Does a buyer from an NRI still need a TAN?
From 1 October 2026, a resident individual or HUF buying from an NRI can deduct and deposit TDS using their PAN through Form 141, without a TAN. Companies, firms and LLPs still need one.
If you are thinking of selling a home or plot in Bangalore and want a clear plan for pricing, documents, buyer checks and timing around your reinvestment, start with our sell your home service and bring your CA into the conversation early. Message me on WhatsApp.
Sources
- TaxGuru: Capital Gains under New Income tax Act, 2025 for Tax Period 2026-27
- Foros Knowledge Base: Income-tax Act 2025, Capital Gains Exemptions
- Business Standard: CBDT notifies Cost Inflation Index for FY2026-27 at 384
- TaxGuru: TDS on Property Transfers (From 01.04.2026): Forms 141 and 132
- Dinesh Aarjav and Associates: TDS on Property Purchase from NRI, No TAN Needed 2026
- TaxGuru: Section 50C vs 43CA vs 56(2)(x), Stamp Duty Value Taxation
- ClearTax: Income Tax Changes From 1st April 2026
Last updated Sep 29, 2026. Figures and rules change; check current details with a professional before you act.