The Finance Act 2024, with effect from 23 July 2024, restructured the Indian capital gain tax framework across property, jewellery, art, listed equity, unlisted shares and other capital assets.
The amendment introduced significant changes to long-term and short-term capital gain taxation, while retaining the existing holding-period framework.
LTCG on most assets including property, jewellery, art, unlisted shares and debt instruments was reduced from 20% with indexation to 12.5% without indexation.
The short-term capital gain rate applicable under Section 111A increased from 15% to 20%.
LTCG under Section 112A increased from 10% to 12.5%, while the annual exemption threshold increased from ₹1 lakh to ₹1.25 lakh.
The holding period remains 24 months for most capital assets including property, unlisted shares, jewellery and art, and 12 months for listed equity.
For capital assets acquired before 23 July 2024, the Finance Act 2024 provides transitional provisions allowing the taxpayer to compute the LTCG under whichever of two methods produces the lower tax.
12.5% without indexation is applied to the resulting long-term capital gain.
20% with indexation is applied to the resulting long-term capital gain.
The Government Approved Capital Gain Valuer’s certificate is critical to this comparison. The Section 55(2)(b) FMV as on 1 April 2001 is the base for Method B’s indexed cost computation.
A higher Section 55(2)(b) FMV produces a higher indexed cost; a higher indexed cost produces a lower taxable gain under Method B; and a lower taxable gain at 20% may be less than the unindexed gain at 12.5%.
For high-value properties and collections in markets with strong appreciation, including NCR, Mumbai and Bengaluru, Method B with a well-established Section 55(2)(b) base can produce the lower tax outcome.
The Cost Inflation Index (CII), published annually by the Central Board of Direct Taxes (CBDT) under the Cost Inflation Index Notification, is the index used to compute the indexed cost of acquisition.
Where Section 55(2)(b) is exercised for a pre-2001 asset, the relevant base is CII 100 for FY 2001–02.
For Section 55(2)(b) assets, the 1 April 2001 FMV becomes the indexed-cost base.
For assets acquired between 2001 and 2024, the actual cost of acquisition forms the starting point for indexed cost.
Consider a flat in South Delhi purchased for ₹10 lakh in 1988 with a Section 55(2)(b) FMV of ₹60 lakh as on 1 April 2001.
For FY 2024–25, the applicable CII is 363. The indexed cost under Method B is:
If the flat is sold for ₹250 lakh, the resulting comparison demonstrates why the quality and defensibility of the 1 April 2001 valuation can materially affect the tax outcome.
The ₹60 lakh Section 55(2)(b) FMV, rather than a lower retrospective value, is central to the indexed-cost calculation.
A well-established, defensible Section 34AB-certified FMV as on 1 April 2001 is no longer merely a cost-of-acquisition documentation exercise — it is a core capital gain planning tool under the Finance Act 2024 transitional framework.
The Government Approved Capital Gain Valuer establishes the retrospective Section 55(2)(b) base value.
The established FMV becomes the base for Method B indexed-cost computation where Section 55(2)(b) is applicable.
The valuation feeds directly into the Method A vs Method B tax comparison performed under the transitional framework.
A properly established Section 34AB valuation certificate supports the retrospective FMV used in the capital gain computation.
Property · Jewellery · Art · Other Capital Assets