Capital Gains Tax on Selling Land in Patna 2026: Rates, Saving

Short answer: when you sell land, a house or a flat in Patna held for more than 24 months, the profit is a long-term capital gain taxed at 12.5% under the Income-tax Act, 2025. If you are a resident individual or HUF and acquired the land before 23 July 2024, your tax is capped at what it would be at 20% with indexation, so you pay whichever is lower. Rural agricultural land is not a capital asset at all, so its sale is not taxed as a capital gain. You can also save the tax by putting the gain into a house, specified bonds or new farmland within fixed time limits. Details, examples and Patna-specific points below.

From 1 April 2026 the Income-tax Act, 1961 has been replaced by the Income-tax Act, 2025. The rules for selling property are mostly the same, but the section numbers have changed: the old Section 54 is now 82, 54F is 86, 54EC is 85 and 54B is 83. Many websites still quote the old numbers. This guide uses the new Act's text.

Is your land a capital asset at all? The Patna farmland rule

Under Section 2(22) of the 2025 Act, agricultural land in India is not a capital asset unless it lies:

• inside a municipality, municipal corporation, nagar panchayat or cantonment with a population of 10,000 or more; or
• within the following distance, measured aerially, from the limits of such a body:

Population means the last census published before the tax year, which today is Census 2011. Patna Municipal Corporation's population was about 17 lakh in 2011 (its own website), so agricultural land within 8 km aerially of the PMC boundary is a capital asset, and taxable. Beyond that, check the nearest other urban body too (Danapur, Phulwari Sharif, Khagaul, Masaurhi, Barh, Bihta and others), because each has its own belt based on its own population. Measure the aerial distance on a map from the body's notified limits, and keep a printout with your tax papers.

Two cautions. First, the land must actually be agricultural land; a residential plot carved out of a field and sold as a plot is a different question. Second, even when no tax is due, the sale must still be shown correctly in your return. If you are unsure, have a CA look at it before the sale.

Short-term or long-term?

• Held 24 months or less: short-term capital asset (Section 2(101)(a)). The gain is added to your income and taxed at your normal slab rate.
• Held more than 24 months: long-term. Taxed under Section 197.
• Inherited or gifted land: the period the previous owner held it is included (Section 2(101)(c)(B)). So land your father bought in 1995 and you inherited in 2025 is long-term if you sell in 2026.

How the capital gain is calculated

Capital gain = sale price − transfer expenses − cost of acquisition − cost of improvement (Section 72(1)).

The rate: 12.5%, or 20% with indexation if lower

Section 197(1) taxes long-term capital gains at 12.5%, without indexation. Section 197(3) gives resident individuals and HUFs a protection for land or buildings acquired before 23 July 2024: if the tax at 12.5% is more than the tax would be at 20% on the indexed gain, the excess is ignored. In plain words, you pay the lower of the two. Indexation adjusts your cost using the Cost Inflation Index (CII); for tax year 2026-27 the CII is 384 (CBDT Notification S.O. 3889(E), 15 July 2026).

Health and education cess, and surcharge on high incomes, are added under the Finance Act for the year; your CA will add these. If your other income is below the basic exemption limit, a resident individual can use the unused limit against the long-term gain (Section 197(2)).

Worked examples for a Patna plot

Example 1: a plot in Danapur bought in June 2010 (financial year 2010-11, CII 167) for ₹10 lakh including stamp duty, sold in November 2026 for ₹60 lakh. No other expenses, for simplicity.

12.5% is lower here, so the tax is ₹6,25,000 plus cess.

Example 2: the same plot, but bought in 2010-11 for ₹30 lakh and sold for ₹60 lakh. At 12.5% the gain is ₹30 lakh and the tax ₹3,75,000. With indexation the cost becomes ₹30,00,000 × 384 ÷ 167 = ₹68,98,204, which is more than the sale price, so the indexed gain is nil. Under Section 197(3) the tax is then nil. Where prices have risen slowly, the indexation option can save the whole tax; this is why the comparison is worth doing every time.

The CII for 2010-11 (167) is from CBDT Notification No. 44/2017. Ask your CA to check the CII for your purchase year.

How to save capital gains tax on selling land in Patna

Not bought the house yet when your return is due? For Sections 82, 83 and 86, the unused amount must be deposited in the notified capital gains account scheme at a bank before the due date of your return, and used within the time limit. Otherwise the exemption is lost. For a plot built on later, keep construction bills.

Building your own house in Patna is a common route: sell an old plot in Bihta, build on a plot in the city within 3 years, and claim Section 86. Keep every payment by bank.

TDS, bayana and other points for a seller

• 1% TDS: on a non-agricultural property sold for ₹50 lakh or more (price or stamp duty value), the buyer deducts 1% in your PAN (Section 393(1), Table Sl. No. 3(i)). Claim it in your return. An NRI seller faces a different, higher TDS; see selling from outside Bihar.
• Bayana kept when a deal fails: a forfeited advance received during negotiations is taxed as "income from other sources" in the year it is forfeited (Section 92(2)(h)). Advances forfeited and taxed earlier are not reduced from cost again (Section 81). More in bayana and the sale agreement.
• Pay on time: the gain is income of the tax year of sale. Ask your CA about advance tax so you don't pay interest.
• Selling below MVR to save stamp duty doesn't save you tax: your gain is computed on the MVR unless it is within 110% of the price. How to set the price: fair price from MVR in Patna.

What should you do? (Our advice)

• Before the sale: find your purchase deed, the stamp duty you paid and bills for any construction. For pre-2001 or inherited land, get the 1 April 2001 MVR.
• Farmland near Patna: measure the aerial distance from PMC and the nearest town before assuming it is tax-free.
• Compare both options (12.5% and 20% indexed) if you bought before 23 July 2024.
• Decide the reinvestment early: bonds within 6 months, house within 1-2 years (or 3 years to build), and the deposit account before your return.
• Talk to a CA with these numbers; this article explains the law, your own case may have more to it.

Capital gains tax on land in Patna: frequently asked questions

1. How much tax do I pay on selling land in Patna in 2026?

   If held for more than 24 months, 12.5% on the gain. Resident individuals and HUFs who acquired the land before 23 July 2024 pay the lower of that and 20% on the indexed gain. If held 24 months or less, the gain is taxed at your slab rate. Cess and any surcharge are extra.

2. Is there tax on selling agricultural land in Bihar?

   Not as a capital gain if it is rural agricultural land, meaning outside any municipality of 10,000+ population and outside the aerial belt around it (2, 6 or 8 km depending on population). For Patna Municipal Corporation, with about 17 lakh people in 2011, the belt is 8 km. Agricultural land inside these limits is taxable like any other land.

3. What is the new section for Section 54 and 54EC?

   Under the Income-tax Act, 2025, old Section 54 (house to house) is Section 82, 54F (other asset to house) is 86, 54EC (bonds) is 85 and 54B (farmland to farmland) is 83.

4. What is the cost of inherited land for capital gains?

   The cost to the previous owner, plus improvements. If the previous owner got it before 1 April 2001, you can take the fair market value on 1 April 2001 instead, capped at the stamp duty value on that date. The previous owner's holding period counts toward your 24 months.

5. Is indexation still available on land?

   Only as a comparison for resident individuals and HUFs on land or buildings acquired before 23 July 2024: you pay the lower of 12.5% without indexation and 20% with indexation. The Cost Inflation Index for 2026-27 is 384.

6. If I sell below MVR, is my tax lower?

   No. If the stamp duty value is more than 110% of the deed price, the stamp duty value is taken as your sale price under Section 78. You can ask for a reference to a Valuation Officer if you believe the MVR is above the market value.

7. How can I avoid capital gains tax on selling a plot?

   Buy or build one residential house with the net sale price under Section 86 (1 year before or 2 years after the sale, or construct within 3 years), or invest up to ₹50 lakh of the gain in NHAI/REC bonds within 6 months under Section 85. Deposit unused amounts in the capital gains account scheme before your return is due.

This article was written on 22 October 2026 from the Income-tax Act, 2025 as published in the Gazette of India and CBDT notifications on the Cost Inflation Index. Rates of cess and surcharge come from each year's Finance Act. Tax law has conditions and exceptions not all covered here; consult a chartered accountant for your own case. This is general information, not tax advice.