The July 2024 Capital Gains Overhaul, Two Years On: What It Actually Cost and Saved NRIs

On 23 July 2024, Nirmala Sitharaman stood up to present the first full Budget of the new government and, somewhere in the middle of an otherwise unremarkable speech, rewrote the capital gains code with effect from that same afternoon. No phase-in, no notice. A flat sold on 22 July fell under one set of rules; the identical flat sold on 24 July fell under another. For the millions of NRIs who hold Indian shares, funds and property, it was the most consequential tax change in years, and almost none of them saw it coming. Two years later, the dust has settled, the return utilities have caught up, and we can finally say with numbers rather than predictions who actually won and who quietly paid more.

The 30-second answer: The 23 July 2024 overhaul raised short-term equity tax from 15% to 20%, cut long-term equity and property tax to 12.5%, lifted the equity exemption from Rs 1 lakh to Rs 1.25 lakh, abolished indexation, and unified holding periods at 12 months (listed) and 24 months (everything else). Two years on, NRIs with long-term listed equity gains pay slightly less per rupee; short-term equity sellers pay more; and the clear losers are NRIs selling long-held property, because the 20%-with-indexation fallback was given to resident individuals and HUFs only. The rates survived Budget 2025 and the Income Tax Act 2025 unchanged, so this is still the law in 2026.

This is a retrospective, not a primer. If you want the full mechanics of how an NRI's gains are computed today, that lives in the dedicated capital gains guide. What follows here is the story of the change itself: what each piece was meant to do, how it landed, and the specific rupee consequences for an NRI in the UK, the UAE, the US or Canada who has been transacting in India across these two years. I will be honest where the picture is mixed, because for NRIs it genuinely is.

The change in one paragraph, because the speech buried it

Strip away the rhetoric and the overhaul did five things at once. It raised the short-term rate on listed equity and equity mutual funds from 15% to 20% under Section 111A. It cut the long-term rate on the same assets from 10% to 12.5% under Section 112A, while raising the annual exemption from Rs 1 lakh to Rs 1.25 lakh. It cut the long-term rate on property and most other assets from 20% to 12.5% under Section 112, but removed indexation in the same stroke. It collapsed a tangle of holding periods into just two, 12 months for listed securities and 24 months for everything else. And it applied all of this to transfers made on or after 23 July 2024, with the old rules governing anything sold up to 22 July. The CBDT issued clarifying FAQs the same evening, which is how you know even the government expected confusion.

The framing was "simplification and rationalisation", and for a resident retail investor it broadly was. For an NRI the picture fractured, because the reliefs that softened the blow were not written to include you.

Short-term equity: a straight 33% increase in the rate, felt most by the active

The cleanest loss to identify is short-term equity. Before 23 July 2024, an NRI selling listed shares or equity mutual fund units held twelve months or less paid 15% on the gain under Section 111A, routed for non-residents through Section 115AD. After, the rate is 20%. That is a one-third increase in the headline rate, and there was no offsetting relief anywhere. If you trade Indian equities actively, rebalance frequently, or got caught holding a position that you had to exit inside a year, you simply pay more now than you did in early 2024.

Put real numbers on that. Consider Arjun, a London-based NRI who runs an active Indian equity portfolio through his NRO account and booked a short-term gain of Rs 8,00,000 in the financial year. Under the old 15% rate his tax was Rs 1,20,000 plus 4% cess, about Rs 1,24,800. Under the new 20% rate the same gain attracts Rs 1,60,000 plus cess, about Rs 1,66,400. The overhaul cost him roughly Rs 41,600 on this single year's churn, and nothing he could do about the rate. Had he held those same positions past the twelve-month line and into long-term territory, he would have paid 12.5% on the gain above Rs 1.25 lakh, about Rs 84,375 plus cess, which sharpens an old lesson into a new one: the penalty for impatience in Indian equity got materially heavier in July 2024. The gap between holding eleven months and thirteen months is now the difference between 20% and 12.5%, on top of the exemption you only get on the long-term side.

There is one quiet relief inside the short-term change, and it matters only to high earners. Surcharge on capital gains taxed under Sections 111A, 112A and 112 is capped at 15%, even where the taxpayer's income would otherwise attract 25%. That cap survived the overhaul untouched. So an NRI with a very large total income still has their short-term equity tax topped out at 20% plus a 15% surcharge plus cess, not the 25% surcharge that would apply to ordinary income. The rate went up, but the surcharge ceiling did not move, and a tax preparer who applies the slab surcharge to your equity gains is overcharging you. That mechanic is unpacked in the main capital gains guide.

Long-term equity: the rare place an NRI came out ahead

Here is the one part of the overhaul that left most NRIs slightly better off, and it deserves to be said plainly because the headlines at the time were uniformly grim. The long-term rate on listed equity and equity mutual funds fell from 10% to 12.5%. That sounds like an increase, and on the rate alone it is. But the annual exemption rose from Rs 1 lakh to Rs 1.25 lakh, and for most NRI portfolios the exemption increase plus the modest gap between 10% and 12.5% nets out close to neutral, tilting to a benefit only on smaller gains and to a small cost on very large ones.

The crossover is worth knowing. The breakeven sits around a Rs 11 lakh annual long-term gain. Below that, the larger exemption outweighs the higher rate and you pay less than you would have under the old regime; above it, the 2.5-point rate rise dominates and you pay a little more. Most NRIs harvesting gains in the Rs 2 lakh to Rs 8 lakh range each year are squarely in the zone where the overhaul reduced their bill.

The gap is easiest to see on a mid-sized realisation. Take Priya, a Dubai-based NRI who sells equity mutual fund units held four years with a long-term gain of Rs 5,00,000. Under the old rules her exemption was Rs 1 lakh, leaving Rs 4,00,000 taxed at 10%, or Rs 40,000 plus cess, about Rs 41,600. Under the post-July-2024 rules her exemption is Rs 1.25 lakh, leaving Rs 3,75,000 taxed at 12.5%, or Rs 46,875 plus cess, about Rs 48,750. So on a Rs 5 lakh gain she pays roughly Rs 7,150 more, which is the honest answer: at this size the rate rise narrowly beats the exemption bump. Flip it to a Rs 2,00,000 gain and the maths reverses. Old: Rs 1,00,000 taxed at 10%, Rs 10,000 plus cess. New: Rs 75,000 taxed at 12.5%, Rs 9,375 plus cess. She now pays a little less. The takeaway for an NRI who realises modestly each year is that long-term equity is the corner of the overhaul that did not hurt, and the discipline of harvesting up to the Rs 1.25 lakh exemption annually got slightly more rewarding, not less.

For UAE residents there is a further layer the overhaul did not touch and did not need to: the India-UAE treaty can still take the Indian tax on listed-share gains to zero entirely, with a Tax Residency Certificate and Form 10F in place. The 12.5% rate is the fallback you pay only if the treaty route is unavailable. That position is unchanged since 2024 and remains the single most valuable lever for a Gulf-based NRI.

Property: where the overhaul quietly built an NRI-only penalty

This is the part that should make an NRI property-owner sit up, because it is where the gap between you and a resident widened the most, and it happened almost by accident.

When the Budget cut the property long-term rate from 20% to 12.5%, it removed indexation at the same time. Indexation is the mechanism that inflated your purchase cost by a government cost-inflation index, shrinking the taxable gain to reflect that rupees in 2010 bought more than rupees in 2026. Removing it means your gain is now computed against your actual historical cost, with no inflation adjustment, against a much higher sale price. For a long-held, modestly-appreciating property, indexation was often the difference between a large taxable gain and almost none. The 2024 change wiped it out.

The backlash was immediate and loud, and within days the government partially relented. A grandfathering relief was added: for land or buildings acquired before 23 July 2024, the seller could choose to pay either 12.5% without indexation or the old 20% with indexation, whichever produced the lower tax. Crisis averted, the headlines said. Except the relief was written into the law for resident individuals and resident Hindu Undivided Families only. Non-residents were left out, and remain out two years later. An NRI selling Indian property today pays a flat 12.5% on the unindexed gain, with no fallback, no choice, regardless of whether the property was bought in 1995 or 2023.

The gap is easiest to see on one flat in two different hands. A flat bought in 2010 for Rs 50,00,000 sells in 2026 for Rs 1,50,00,000. Suppose indexation, had it applied, would have lifted the cost to roughly Rs 1,15,00,000. A resident gets to run both calculations: 12.5% on the unindexed gain of Rs 1,00,00,000 is Rs 12,50,000; or 20% on the indexed gain of Rs 35,00,000 is Rs 7,00,000. The resident picks the lower and pays about Rs 7,00,000 plus surcharge and cess. The NRI selling the identical flat in the same building has no choice and pays 12.5% on the full Rs 1,00,00,000, or Rs 12,50,000 plus surcharge and cess. That is roughly Rs 5.5 lakh more tax on the same asset, purely from residency status.

Now compare the NRI's position before and after the overhaul to be fair about it, because the rate did fall. Under the old 20%-with-indexation regime that NRI would have paid 20% on the indexed gain of Rs 35,00,000, or Rs 7,00,000, the same as the resident pays now. Under the new regime the NRI pays Rs 12,50,000. So the overhaul cost this particular NRI seller about Rs 5.5 lakh on a single property, and handed the resident a choice that keeps them exactly where they were. The change was sold as a rate cut. For NRIs holding long-appreciated property it functioned as a rate rise of nearly 80% on the tax due, because the thing that made the old 20% bearable, indexation, vanished with no substitute.

There is nuance worth being honest about. On a property that appreciated fast, where the gain dwarfs any inflation adjustment, the move to 12.5% without indexation can actually be cheaper than 20% with indexation, and there the NRI benefits from the rate cut just as the resident does. The penalty bites hardest on old, slow-growing property, typically inherited flats and land held for decades, which is precisely the category many NRIs hold. So the rule of thumb that emerged over these two years is this: if your Indian property roughly doubled or less over a long hold, the overhaul made selling materially more expensive for you than for a resident; if it tripled or more over a shorter hold, the difference narrows or disappears. The exemptions under Sections 54, 54EC and 54F became correspondingly more important as the only remaining way to shelter the gain, and they are covered in the exemptions guide and in selling property as an NRI.

Debt and specified funds: the overhaul was an anticlimax, because the damage was done in 2023

NRIs who held debt mutual funds braced for a hit in July 2024 and mostly did not get one, because the relevant change had already happened sixteen months earlier. From 1 April 2023, Section 50AA had stripped specified mutual funds, broadly those investing 65% or more in debt, of any long-term benefit: every gain on units bought from that date is treated as short-term and taxed at the investor's slab rate, no matter how long held, with no 12.5% rate and no indexation. The July 2024 overhaul did not undo this and did not need to add to it. For an NRI, slab-rate taxation on debt-fund gains was already the reality before the overhaul, and it stayed the reality after.

Where the 2024 change did matter for non-equity holdings was at the margins. Units of debt funds bought before 1 April 2023 still followed the older holding-period logic, and after July 2024 a genuine long-term holding of those legacy units became taxable at 12.5% without indexation, same as property. Gold funds, international funds and funds holding between 35% and 65% in debt had their holding periods re-cut to the new 12 and 24 month grid. The practical lesson for an NRI building a portfolio across these two years has been to stop assuming any non-equity fund delivers a soft long-term rate, and to check the fund's debt percentage and your own purchase date before counting on one. For US and Canada residents the PFIC overlay can make the Indian rate academic anyway, which is a separate and larger problem covered in the mutual-fund eligibility material linked from the main guide.

Holding periods: the one genuine simplification, and it helped a bit

Buried under the rate noise was a change that actually made life simpler and, in places, cheaper. Before July 2024, India ran a confusing spread of holding periods: 12 months for listed equity, 36 months for debt funds and gold and unlisted securities, 24 months for property and unlisted shares. The overhaul collapsed this to two. Listed securities, including listed REIT and InvIT units, became long-term at 12 months. Everything else, including gold, unlisted securities other than unlisted shares, property and unlisted shares, became long-term at 24 months.

The clear winner here was anyone holding listed REIT or InvIT units, where the long-term threshold dropped from 36 months to 12, and anyone holding gold or unlisted securities, where it dropped from 36 to 24. An NRI who had parked money in a listed InvIT and was eyeing a three-year hold to qualify for long-term treatment suddenly qualified at one year. It is a small mercy against the larger losses elsewhere, but it is real, and it is the part of the overhaul a chartered accountant would genuinely call simplification rather than rate-dressed-as-reform.

What changed since, and what stayed exactly the same

Two budgets have passed since the overhaul, and the headline capital gains structure has not moved. Budget 2025 left the rates untouched. The new Income Tax Act 2025, which replaces the 1961 Act and governs assessment year 2026-27 onwards, carries the same architecture forward without re-litigating it: 20% short-term and 12.5% long-term on listed equity, 12.5% without indexation on property and most long-term assets, the Rs 1.25 lakh equity exemption, and the 12 and 24 month holding periods. For an NRI filing for AY 2026-27, the rules that applied to a sale in 2025 or early 2026 are the rules described in this piece. What was billed in July 2024 as a one-off rationalisation has become the settled baseline.

The one NRI-relevant development since has been a computation relief for unlisted shares, allowing the sale consideration to be adjusted for currency fluctuation, which can reduce the taxable gain for an NRI who bought unlisted Indian shares in foreign currency. It is a narrow benefit, useful to founders, ESOP-holders and angel investors in Indian startups, and it does nothing for the two big NRI sore points, listed equity and property. The resident-only property option has not been extended to non-residents, and there is no signal in either budget that it will be. If you have been waiting for the indexation fallback to be handed to NRIs before selling a long-held flat, the honest read is that two years of silence suggests it is not coming. The detail of how the current Act treats all this sits in the Income Tax Act 2025 NRI guide and the Budget 2026 recap.

Edge cases that caught NRIs out across these two years

The straddle around 23 July 2024. The single most common avoidable mistake was a sale that completed just after 23 July when it could have completed just before. An NRI who signed a property sale agreement in June but let the registration and transfer slip to August moved an old-regime indexed sale into the new no-indexation regime, in some cases adding several lakh to the bill. For sales genuinely in flight across that date, the transfer date governs, and a few who pushed hard to close before 23 July saved real money. That window is closed now, but it explains why two otherwise identical 2024 sales produced wildly different tax.

Buy-backs flipped to dividend treatment from 1 October 2024. Separately from the capital gains overhaul but in the same season, company share buy-back proceeds stopped being taxed as capital gains in the shareholder's hands and became taxable as deemed dividends from 1 October 2024. For an NRI who tendered shares into a buy-back expecting capital gains treatment and the Rs 1.25 lakh exemption, the income instead landed as dividend, taxable differently and often at a higher effective rate, with TDS to match. If you participated in a buy-back after that date, check that it was reported as dividend, not capital gain.

The Rs 1.25 lakh exemption and Section 115AD. Older commentary argued that non-residents taxed under Section 115AD did not get the equity exemption that Section 112A gives residents. The return utilities apply it to NRIs in practice, and that did not change with the overhaul, but on a very large or unusual gain it is still worth having your CA confirm the position for your specific year rather than assuming.

TDS over-withholding got worse, not better, on property. With the property rate now a flat 12.5% on the gain for NRIs, buyers who deduct under Section 195 still routinely apply 12.5% (or more, with surcharge and cess) to the entire sale value rather than the gain, because they cannot compute the gain themselves. On a Rs 1.5 crore flat that can mean Rs 19 lakh or more withheld against a true liability that might be Rs 6 lakh, refunded only after you file. A lower-deduction certificate under Section 197 remains the fix, and the overhaul made it more important, not less, because there is no longer an indexation calculation to argue the true gain down. The mechanics are in TDS for NRIs and refunds.

The honest read

Two years on, the verdict for NRIs is genuinely split, and anyone who tells you the overhaul was uniformly good or bad is simplifying. If you hold listed equity and realise long-term gains in modest amounts each year, the overhaul left you slightly better off, and the discipline of harvesting up to Rs 1.25 lakh tax-free every financial year is the move to keep making. If you trade short-term, you pay a third more than you did, and the case for holding past the twelve-month line is stronger than ever. If you are a UAE resident, none of the rate changes should matter much, because the treaty route to zero tax on listed shares survived intact and is still worth more than any other lever. But if you hold long-held Indian property, especially inherited flats and land that has appreciated slowly over decades, the overhaul built a quiet, residency-based penalty into the code: you pay 12.5% on the unindexed gain while the resident next door chooses the cheaper of two methods, and the gap can run to several lakh on a single flat.

So my committed recommendation for the common case is this. Keep harvesting equity gains up to the exemption annually and lean toward long-term holds. Before you sell any long-held Indian property, run the indexation comparison even though you cannot use it, because it tells you exactly how much the no-indexation rule is costing you, and then weigh selling against continuing to let the property out, because for slow-growing property the tax now often argues for holding. On any property sale, get a Section 197 certificate before completion so you are not financing the government for a year. And if you are sitting on a large property gain, this is the point to pay a chartered accountant to model Sections 54, 54EC and 54F against your numbers, not to rely on a blog, this one included. The overhaul is settled law now. The planning around it is where the money still is.

Related guides

• Capital gains tax for NRIs on shares and mutual funds
• Capital gains exemptions: Sections 54, 54EC and 54F
• Selling property in India as an NRI
• The Income Tax Act 2025 and what it means for NRIs
• Budget 2026: what changed for NRIs
• ITR filing for NRIs: AY 2026-27
• TDS for NRIs and how to claim refunds
• All News and commentary
• All Taxation guides
• All Investments guides

This guide is educational and general in nature. It is not individual tax advice. The capital gains rules described here changed on 23 July 2024 and again under the Income Tax Act 2025, and outcomes depend on your exact holdings, dates, residency and treaty position, so confirm your specific situation with a qualified chartered accountant before you sell.