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Sold a long-held property after retirement: Which ITR to file and whether a refund is due

balwant jain
By Balwant Jain

3 min read | Updated on June 18, 2026, 16:01 IST

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SUMMARY

Sold a long-held property for ₹1.74 crore after retirement? Understand the capital gains tax implications, ITR filing requirements, and whether you can claim a refund of advance tax paid.

senior citizen tax query

Whether you intend to claim the indexation benefit or not, you have to use ITR-2, provided you do not have any business income. | Image: Shutterstock.

Selling a long-held property can raise several tax questions, especially for retirees who may already be managing pension income and want clarity on the impact of a large capital gain. With the recent changes in capital gains taxation, many taxpayers are unsure whether indexation is available, which ITR form to choose, and whether taxes paid in advance will be refunded.

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Today's Q&A explains such details in response to a query by a reader.

Question: My income details are as under: Gross pension received ₹5,75,160; Less: Standard Deduction ₹75,000; Taxable pension ₹5,00,160. I have also sold a property during the year. The details of purchase and sale are as under: Property acquired on 01/12/2009 for ₹93,17,170 and property sold on 31/01/2026 for ₹1,74,00,000. Please let me know which ITR I should use for indexation benefit. I have already paid advance tax of ₹1,74,000. Please let me know whether I will get a refund.
Answer: Since your normal income, which gets taxed at slab rates, is below ₹12 lakh, it is advisable to opt for the new tax regime, where you are eligible to claim a rebate under Section 87A of the Income Tax Act, 1961. This will apply for the Income Tax Return (ITR) to be filed for Financial Year 2025-26, up to ₹ 60,000 against the tax liability on income taxed at slab rates.

The tax on your normal income of taxable pension of ₹5,00,160 comes to ₹5,008, for which you will get a full rebate under Section 87A of the Income Tax Act, 1961.

As far as the taxation of long-term capital gains on the sale of the property is concerned, you have the option either to pay tax at 12.50% on plain long-term capital gains of ₹80,82,830, which comes to ₹ 10,10,354. Since the property was bought before 23 July 2024, you also have an option to pay tax at 20% on indexed long-term capital gains.

The indexed cost, based on the Cost Inflation Index (CII) of 148 for FY 2009-10 and 376 for FY 2025-26, comes to ₹2,36,70,648. Since your sale price is below your indexed cost, you do not have to pay any tax, as the option of paying 20% on indexed cost brings your tax liability to zero.

Therefore, you will be able to claim a full refund of the taxes paid.

Whether you intend to claim the indexation benefit or not, you have to use ITR-2, provided you do not have any business income. In case you have any business income, you will have to use ITR-4 if opting for presumptive taxation; otherwise, use ITR-3.
Have a personal finance, mutual fund, or income tax query? We will try to get them answered by experts. Write to sangeeta.ojha@rksv.in
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Disclaimer: The views and opinions expressed above are those of respective experts/commentators and do not reflect the views of Upstox. The above Q&A is only for informational purposes and should not be considered investment or tax advice from Upstox. Please consult a tax expert for your complex tax problems.

About The Author

balwant jain
Balwant Jain is a Mumbai-based tax and investment expert.

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