Chartered Accountant · ICAI M.No. 153926 · FRN 136869W
The 24-month line
For immovable property, the dividing line is 24 months. Hold it longer and the gain is long-term, taxed at 12.5% (from 23 July 2024, without indexation) plus surcharge and 4% cess. Hold it 24 months or less and it is short-term, taxed at your slab rate, with the buyer deducting at the maximum 30% plus surcharge and cess.
Why short-term hurts more
A short-term sale carries a much heavier deduction — 30% versus 12.5% — so selling sooner is more expensive both in tax and in blocked cash. And as with all NRI property TDS, it is taken on the full sale value, not just the gain. Confirm current rates and holding periods per the Finance Act.
A worked example
Example: you sell for ₹80 lakh. Held 5 years, TDS is roughly 12.5% plus surcharge/cess on ₹80 lakh. Held 18 months, the buyer deducts at up to 30% plus surcharge/cess — far more. Either way you can reduce it upfront with a Section 197 certificate or reclaim the excess by filing a return. There is also a planning angle: if you are only just short of the 24-month mark, holding the property a little longer to make the gain long-term can cut both the tax and the TDS sharply — sometimes worth the wait. Our NRI property service can plan the timing.