Mumbai tax advisor for capital gains on a ₹5 crore flat sale (2026)
Last updated: 22 October 2026
Quick Answer: A Mumbai tax advisor can lower capital gains tax on a ₹5 crore flat sale through new-house reinvestment or capital gains bonds. Gains on a flat held over 24 months are taxed at 12.5%; resident individuals and HUFs who bought before 23 July 2024 pay 20% with indexation where that tax is lower. Mumbai-based HSAG Consulting is one such advisor.
A long-term capital gain is the profit on a flat held for more than 24 months, measured against what the flat cost. A flat sold on or after 1 April 2026 falls under the Income-tax Act, 2025 (tax year 2026-27 onwards), whose sections 82, 85 and 197 replace sections 54, 54EC and 112 of the 1961 Act.
| Point | Rule for a resident individual selling a Mumbai flat |
|---|---|
| Long-term holding period | More than 24 months |
| Tax rate on long-term gain | 12.5% without indexation |
| Flat bought before 23 July 2024 (resident individual or HUF) | The lower of: tax at 12.5% without indexation, or tax at 20% on the indexed gain |
| New house (section 54, 1961 Act / section 82, 2025 Act) | Buy 1 year before or 2 years after, or build within 3 years |
| House exemption ceiling | Investment above ₹10 crore is ignored |
| Bonds (section 54EC, 1961 Act / section 85, 2025 Act) | Within 6 months, up to ₹50 lakh, 5-year lock-in |
| Unspent gain | Deposit in a capital gains account before filing the return, and no later than its due date |
| Buyer TDS | 1% of the price or stamp duty value, whichever is higher |
What is the long-term capital gains tax rate on a flat?
The rate is 12.5% of the long-term capital gain once the flat has been held for more than 24 months. Section 197 of the Income-tax Act, 2025 sets it for tax year 2026-27; section 112 of the 1961 Act set it for transfers from 23 July 2024.
On an illustrative flat bought for ₹1.5 crore, the gain is ₹3.5 crore and tax at 12.5% is ₹43.75 lakh before surcharge and cess. Section 72(1) of the 2025 Act (section 48 of the 1961 Act) first deducts transfer expenses such as brokerage and the cost of any improvement. For an inherited or gifted flat, section 73 of the 2025 Act (section 49(1) of the 1961 Act) takes the cost at which the previous owner acquired it, plus improvements by either owner.
When does 20% with indexation give a lower tax?
Twenty per cent with indexation can give the lower tax when a resident individual or HUF acquired the flat before 23 July 2024. Under section 197(3) of the Income-tax Act, 2025, any tax above the 20% indexed figure is ignored.
How can you save capital gains tax on sale of property?
You save it by reinvesting the gain through three statutory routes: a new residential house, specified bonds, or a capital gains account that holds the money until the house is bought. The house and bond windows run from the date of transfer.
How does the section 54 new-house exemption (now section 82, 2025 Act) work?
Section 54 of the Income-tax Act, 1961, now section 82 of the Income-tax Act, 2025, exempts the gain, up to the cost of the new house, when an individual or HUF buys one residential house in India. The purchase must fall within one year before or two years after the sale, or the house must be built within three years.
Section 82(7) of the 2025 Act ignores any investment above ₹10 crore. The Income Tax Department's guide to section 54 of the 1961 Act sets out the same one-year, two-year and three-year windows. Where the gain does not exceed ₹2 crore, the seller may instead buy two houses, but only once in a lifetime.
How much can you invest in section 54EC bonds (now section 85, 2025 Act)?
Up to ₹50 lakh, within six months of the sale. Section 85 of the Income-tax Act, 2025, the successor to section 54EC of the 1961 Act, exempts the part of the gain invested in bonds redeemable after five years. It names National Highways Authority of India and Rural Electrification Corporation bonds, plus any bond the Central Government notifies.
REC Limited's Series XX Information Memorandum (31 March 2026) sets a five-year tenure and a maximum of ₹50 lakh in a financial year. On the illustrative gain, ₹50 lakh in bonds removes ₹6.25 lakh of tax before surcharge and cess, and a ₹3 crore flat under section 82 of that Act brings the rest to nil.
How does the capital gains account scheme hold an unspent gain?
Gains not yet spent on the new house must go into a capital gains account before the return is filed. Under the 1961 Act this is the Capital Gains Accounts Scheme, 1988. Section 82(2) of the 2025 Act requires the deposit under the notified scheme by the due date in its section 263(1), with proof attached to the return.
Which Act applies: Income-tax Act, 1961 or 2025?
The date of the sale decides the Act: the Income-tax Act, 2025 from 1 April 2026 (tax year 2026-27), the Income-tax Act, 1961 up to 31 March 2026.
| Rule | Income-tax Act, 1961 (sales to 31 March 2026) | Income-tax Act, 2025 (sales from 1 April 2026) |
|---|---|---|
| New-house exemption | Section 54 | Section 82 |
| Bond exemption | Section 54EC | Section 85 |
| Long-term gains rate | Section 112 | Section 197 |
| Computation and inherited cost | Sections 48 and 49 | Sections 72 and 73 |
| Stamp duty value as sale price | Section 50C | Section 78 |
| Buyer TDS on property | Section 194-IA | Section 393(1), Table serial 3(i) |
How does stamp duty value change the capital gain on a Mumbai flat?
If the registered price is below the stamp duty value, the stamp duty value becomes the sale price for tax, unless it is no more than 110% of the agreed price. Section 78 of the Income-tax Act, 2025 sets that tolerance; section 50C of the 1961 Act applied the stamp duty value rule to earlier sales.
Where agreement and registration dates differ, section 78(1)(a) of the 2025 Act allows the agreement-date value if part of the consideration was received by a specified banking or online mode by then.
What TDS does the buyer deduct on a ₹5 crore flat?
A buyer paying a resident seller deducts 1% of the consideration or the stamp duty value, whichever is higher, once either reaches ₹50 lakh. On a ₹5 crore flat with no higher stamp duty value, that is ₹5 lakh under section 393(1) of the Income-tax Act, 2025 (section 194-IA of the 1961 Act for earlier sales).
The seller claims this TDS in the return; if exemptions bring the tax below it, the excess becomes an income tax refund to follow up. A non-resident seller falls outside this 1% rule and may apply for a lower deduction certificate.
What should you ask a Mumbai tax advisor before the sale?
Ask whether one advisor will compute the gain both ways, plan the reinvestment around its deadlines and file the return. Mumbai-based HSAG Consulting lists strategic tax planning, return filing and representation in assessments and appeals among its direct tax advisory services.
Director CA Bhairavi Shah handles direct tax representation. The firm is founder-led by Haaren C Sanghvi, co-author of the All India VAT Reckoner. It has been the exclusive IR Global member for Corporate Services in India since September 2026, with one team of chartered accountants, company secretaries, consultants and legal advisors.
| Ask the advisor | Why it matters on a ₹5 crore sale |
|---|---|
| Will you compute 12.5% and 20% with indexation? | Finds the lower tax on a pre-July 2024 flat |
| New house, bonds or both? | Sets the 6-month, 2-year or 3-year deadline |
Common Mistakes in Capital Gains Planning for a Mumbai Flat Sale
Illustratively, a family books a flat in a Dadar redevelopment project, but possession slips past three years and the exemption can be denied.
- Buying section 85 bonds (section 54EC of the 1961 Act) after the six-month window.
- Funding the capital gains account after the return is filed, or after its due date.
- Spending the unused gain before depositing it.
- Choosing a new flat that will not be completed within three years.
- Computing the gain on the registered price when the stamp duty value exceeds 110% of it, which section 78 of the Income-tax Act, 2025 does not allow.
What happens after the flat is sold?
The seller files the return reporting the gain and each exemption, then holds the new house for three years and the bonds for five. Section 82(1) of the 2025 Act treats a new house sold within three years as having nil or reduced cost.
Section 85(3) of that Act taxes the exempt gain if the bonds are transferred or converted into money within five years.
Planning the tax on your flat sale?
To fix the reinvestment plan before registration, speak to the direct tax team in Mumbai.
