Do I pay tax if I am not resident in India?

Yes, on the gain from an Indian property. Additionally the buyer must deduct tax before paying you, usually far more than you actually owe. We explain how to reduce that.

What if I sell at a loss?

A properly computed loss can generally be set against certain other gains, with rules about which and for how long. Tell your accountant, because losses are often overlooked.

Is agricultural land taxed?

Genuinely rural agricultural land often falls outside the tax entirely, while land closer to a town does not. The test matters a great deal.

Capital Gains Tax on Property, Start to Finish

Everything a property owner needs to know about tax when selling, written for people who are not accountants.

What gets taxed

Not the sale price. The gain. Which is the sale price minus what the property cost you, minus what you spent improving it, minus the costs of selling.

Get the cost figure right and the gain falls. That is the whole game, and it is why valuation matters.

Short term and long term

How long you held the property decides which rules apply. Property held beyond a qualifying period is treated as long term, and long term is where inflation adjustment and the reinvestment exemptions become available. Held for a short period, it is treated as short term and taxed differently, usually less favourably.

For inherited property, the holding period includes the time the previous owner held it. So an inherited house is almost always long term, even if you inherited it last year.

The four things that reduce your gain

Using the 1 April 2001 valueAvailable if the property was bought before that date. Usually the single biggest reduction. Full explanation
Adjusting cost for inflationYour cost is scaled up using the published index. See the table
Counting improvementsMoney spent on construction or major improvement adds to your cost, if you can evidence it. Keep bills.
Deducting selling costsBrokerage and legal costs directly related to the sale come off.

Reinvesting to avoid tax altogether

If you put the money into another residential property within the time limits, you may be able to reduce or remove the tax entirely. The rules are strict about timing and about what qualifies. We explain them here.

The papers to keep

Purchase deed, or the previous owner's if inherited
The valuation report establishing the 2001 value, where relevant
Bills for construction and improvement
Sale deed and evidence of brokerage or legal costs

The mistake that costs the most

Not getting a 2001 valuation when the property qualifies, because nobody mentioned it. We meet families every month who paid tax on decades of inflation simply because they did not know the option existed.

Questions people ask us

Do I pay tax if I am not resident in India?: Yes, on the gain from an Indian property. Additionally the buyer must deduct tax before paying you, usually far more than you actually owe. We explain how to reduce that.
What if I sell at a loss?: A properly computed loss can generally be set against certain other gains, with rules about which and for how long. Tell your accountant, because losses are often overlooked.
Is agricultural land taxed?: Genuinely rural agricultural land often falls outside the tax entirely, while land closer to a town does not. The test matters a great deal.

Checked by Parish Rao, Chartered Engineer and Government Approved Valuer.

Page last checked on 23 August 2026.

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