Budget 2024 capital gains changes for NRIs: what changed and when
The Union Budget 2024 significantly changed capital gains tax for NRIs from FY 2024-25. Property LTCG rate reduced to 12.5% but indexation benefit removed. Listed equity LTCG rate unchanged at 10% but threshold raised from ₹1 lakh to ₹1.25 lakh. STCG on equity raised from 15% to 20%. Debt MF LTCG taxed at slab rate reversed — now at 12.5% without indexation.
Property LTCG is now 12.5% without indexation from FY 2024-25
From FY 2024-25 (Budget 2024): property LTCG rate is 12.5% without indexation (was 20% with indexation — which was better for older properties). Equity STCG raised from 15% to 20%. Equity LTCG unchanged at 10% but threshold raised to ₹1.25 lakh. Holding period for most assets remains the same. NRIs selling property bought before FY 2025 should evaluate which option gives lower tax.
Key points
- Property LTCG: 12.5% without indexation — From FY 2024-25, all property LTCG is taxed at 12.5% without indexation — a reduction from 20% but indexation loss may make it worse for long-held properties.
- Equity STCG raised to 20% — Short-term capital gains on listed equity (held under 12 months) raised from 15% to 20% from Budget 2024.
- Equity LTCG threshold raised to ₹1.25 lakh — Long-term equity gains (12 months+) exempt up to ₹1.25 lakh per year — raised from ₹1 lakh.
Summary of Budget 2024 changes effective FY 2024-25
Listed equity STCG (under 12 months): 15% → 20%.
Listed equity LTCG (12+ months): rate unchanged at 10%, but exemption threshold raised from ₹1 lakh to ₹1.25 lakh per year.
Property (immovable) LTCG (24+ months): 20% with indexation → 12.5% without indexation. The choice of indexation was removed.
Debt mutual funds: LTCG (36+ months) — the slab-rate treatment introduced in 2023 was partially reversed; gains from FY 2024-25 onwards are now taxed at 12.5% without indexation (same as property).
Unlisted shares: LTCG holding period reduced from 36 to 24 months. Rate: 12.5% without indexation.
Effective date: all changes apply from July 23, 2024 (date of Finance Bill 2024 passing) for most assets.
Impact on NRI property sales
For property bought before 2001 and sold after July 2024: the old 20%-with-indexation (using FMV as of April 1, 2001 as cost) was often far better than 12.5%-without-indexation for long-held properties. The Budget removed this choice.
Grandfathering: properties acquired before July 23, 2024 have an option in some scenarios — consult a CA before selling to determine whether transitional provisions apply to your specific acquisition date and cost.
Buyer TDS: buyer must deduct TDS at 12.5% on sale consideration when buying from an NRI (down from previous 20% where applicable).
Frequently asked questions
Is 12.5% without indexation better or worse than 20% with indexation for NRIs?
It depends on the property purchase price and the year of purchase. For a property bought 5–7 years ago, 12.5% without indexation is often better. For a property bought 15–20 years ago, 20% with indexation would typically have been better due to high cost inflation index growth. The option to choose is no longer available from FY 2024-25.
Has the LTCG exemption under Section 54F or 54EC changed?
Section 54F and 54EC exemptions continue as before — the Budget did not change the exemption provisions. You can still invest LTCG in bonds or a new property to claim exemption.
When do these Budget 2024 changes apply?
Most capital gains changes apply to transfers made on or after July 23, 2024 — the date the Finance (No.2) Bill 2024 received Presidential assent. Transfers before that date use the old rates.