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

How much tax? 12.5%, or 20% with indexation if lower

• Held 24 months or less: short-term. The gain is added to your income and taxed at your slab rate.
• Held more than 24 months: long-term, taxed at 12.5% without indexation.
• Bought before 23 July 2024 (resident individual or HUF, land or building): compare 12.5% with 20% on the indexed gain. You pay whichever is lower. You pay the lower of the two.
• Inherited or gifted land: the previous owner's holding period counts. Land your father bought in 1995 and you inherited in 2025 is long-term if sold in 2026.

Indexation raises your cost by the Cost Inflation Index (CII); for tax year 2026-27 it is 384. Cess and any surcharge are added on top under each year's Finance Act.

Source: Income-tax Act, 2025 and CBDT notifications (full list at the bottom). This Act replaced the 1961 Act from 1 April 2026.

Is your farmland taxable at all? The Patna rule

Agricultural land is not a capital asset unless it lies inside a municipality, nagar panchayat or cantonment of 10,000+ people, or within this distance, measured aerially, from its limits:

Population means the last census published before the tax year, today Census 2011. Patna Municipal Corporation had about 17 lakh people in 2011 (its own website). So farmland within 8 km aerially of the PMC boundary is taxable. Beyond that, check the nearest other town too: Danapur, Phulwari Sharif, Khagaul, Masaurhi, Barh, Bihta and others. Each has its own belt. Measure on a map from the notified limits and keep a printout.

Two cautions. The land must actually be agricultural; a residential plot cut from a field is a different question. And even with no tax, the sale must be shown correctly in your return.

How the capital gain is calculated

Capital gain = sale price − transfer expenses − cost of acquisition − cost of improvement

Worked examples for a Patna plot

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

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

Example 2: same plot, bought for ₹30 lakh, 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. That is more than the sale price, so the indexed gain is nil. The tax is then nil. Where prices rose slowly, indexation can save the whole tax, so always compare.

The 2010-11 CII (167) is from CBDT Notification No. 44/2017; ask your CA for your purchase year's CII.

How to save capital gains tax on selling land in Patna

These reliefs are still known by their section numbers, so both the new (2025 Act) and old numbers are given.

House not bought when your return is due? For 82, 83 and 86, put the unused amount in a bank's capital gains account scheme. Do it before the return's due date. Then use it in time. Otherwise the exemption is lost. Common in Patna: sell an old plot in Bihta and build on a city plot within 3 years under 86. Keep construction bills and pay everything by bank.

TDS and other points for a seller

• 1% TDS: the buyer deducts 1% in your PAN on a non-agricultural property sold for ₹50 lakh or more. This uses the price or stamp duty value. Claim it in your return. An NRI seller faces a higher TDS: selling from outside Bihar.
• Pay on time: the gain is income of the year of sale. Ask your CA about advance tax to avoid interest.
• Selling below MVR to save stamp duty doesn't save tax. The gain is worked out on the MVR unless it is within 110% of the price. Pricing: fair price from MVR.

What should you do? (Our advice)

• Before the sale: find your purchase deed, the stamp duty you paid and construction bills. 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, a house within 1–2 years (3 to build), and the deposit account before your return.
• Talk to a CA with these numbers; your own case may have more to it.

Capital gains tax on land in Patna: frequently asked questions

1. Why do websites still say Section 54 and 54EC?

   From 1 April 2026 the Income-tax Act, 1961 was replaced by the Income-tax Act, 2025. The rules for selling property are mostly the same, but the numbers changed: old 54 is now 82, 54F is 86, 54EC is 85 and 54B is 83. Many websites still quote the old ones.

2. My other income is low. Does that reduce the tax?

   Yes, for a resident individual. If your other income is below the basic exemption limit, the unused limit can be set against the long-term gain.

3. I think the MVR is higher than the market value. What can I do?

   You can ask for the matter to be referred to a Valuation Officer. Otherwise, if the MVR is more than 110% of the deed price, the MVR is taken as your sale price.

4. The deal failed and I kept the bayana. Is it taxed?

   Yes. An advance forfeited during negotiations is taxed as "income from other sources" in the year it is forfeited. An advance already taxed that way is not reduced from your cost again later. More: bayana and the sale agreement.