Tax rules 2025-26: Why selling property after April 1, 2025, can be beneficial for you; check details

Property owners planning to sell are encouraged to consider waiting until after April 1, 2025, to maximise financial advantages. Selling after this date shifts the capital gains tax liability to the fiscal year 2025-26, offering sellers a significant deferment. This delay provides a full year to strategise tax-saving investments effectively. 

Tax implications before April 1

Selling a property before April 1st can have significant tax implications. If the property is sold on March 30, 2025, the capital gain will be taxed in FY 2024-25. In contrast, selling the property on April 1, 2025, will shift the tax liability to FY 2025-26.

Delaying the sale until after April 1 will result in the tax liability being pushed to FY 2025-26. This delay provides the taxpayer with a full year to strategize and make tax-saving investments.

Furthermore, selling a property post-April 1 allows for more efficient cash flow management. Sellers can spread the advance tax payments over four instalments starting from June 15, 2025, rather than making a lump sum payment by March 31, 2025.

“The primary advantage is the deferment of capital gains tax. By selling the property after April 1, the capital gain is taxed in the following financial year, giving you a full year to plan tax-saving investments,” Rahul Singh of Taxmann told Hindustan Times.

Additionally, the sale proceeds can be deposited into a Capital Gains Account Scheme (CGAS) account by July 31, 2026, instead of July 31, 2025. This extension grants an extra year to determine the best use of the funds. The deadline for depositing sale proceeds in a CGAS account is extended to July 31, 2026, giving taxpayers an additional year to decide how to manage their funds.

Capital gains reinvestment

Sellers can further enhance their capital gains reinvestment strategy. By reinvesting gains into another residential property under Section 54 of the Income Tax Act, sellers can save on capital gains tax. Options include purchasing a new property a year before or two years after the sale, or constructing a new house within three years post-sale. 
For those not reinvesting in property, Section 54EC offers the alternative of investing in specified bonds, such as those issued by the National Highways Authority of India or the Rural Electrification Corporation, within six months of sale. These bonds, with a five-year lock-in period, provide another tax-saving avenue. 

Selling property in the new financial year after April 1, 2025, provides extended timeframes for strategic tax planning. By doing so, sellers gain flexibility in managing capital gains tax liabilities effectively, enhancing their financial planning efforts. This move also aligns with broader cash flow management strategies, allowing for calculated and potentially more beneficial reinvestment decisions.

Long-Term Capital Gains Tax on property

In the new Income Tax Bill 2025, there have been no changes to the taxation of long-term capital gains (LTCG) from residential property. For properties acquired before July 23, 2024, the tax on such LTCG is calculated as the lower of 12.5 percent (without indexation) or 20 percent (with indexation), plus any applicable surcharge and cess.

If a property is held for more than 24 months before being sold, it is considered a long-term capital asset and the gains from its sale are taxable as LTCG.