Selling a capital asset — property, shares, mutual fund units, gold — for more than you paid for it creates a capital gain. Whether that gain is treated as long-term or short-term depends entirely on how long you held the asset before selling it, and the line isn’t the same for every asset: listed shares and equity mutual fund units turn long-term sooner than property, unlisted shares or gold, and units of debt mutual funds bought from April 2023 are always treated as short-term. 2025 Act s. 197was s. 112 sets the tax on long-term gains.
For property specifically, a gain only counts as long-term once you’ve held it for more than 24 months. Sell before that, and the same profit is taxed as a short-term gain instead — usually at a less favourable rate, since it’s generally added to your other income rather than taxed at a flat rate.
Why the distinction matters more for NRIs
Two things make the long-term/short-term line especially important if you’re an NRI selling property or investments in India:
- The tax rate differs, sometimes substantially, between the two — so knowing which bucket your gain falls into before you sell (not after) can change whether a sale makes financial sense right now.
- Unless you get a lower-deduction certificate, the buyer will usually deduct TDS on the whole sale price, not just the gain, and at the long-term or short-term rate depending on how long the paperwork shows you held the property. Getting it wrong at the point of sale means waiting for a refund to fix it.
What it doesn’t cover
LTCG rules apply asset by asset — the holding period for property isn’t the same as for listed shares or equity mutual funds, listed shares and equity funds get an annual exemption that property doesn’t, and reinvestment exemptions that apply to one asset type may not apply to another. Check the rules for the specific asset you’re selling rather than assuming one rate fits everything you own.
Also called: Long-Term Capital Gains, long-term capital gain
See also
Where it matters
- Capital gains on Indian property for NRIs, explained
- Saving tax on a property sale as an NRI: a new home, bonds or the deposit account
- Indian mutual funds and PFIC: what a US tax resident actually owes