Yes, you are taxed on the full capital gain even though you reinvest in another property. You do get credit for the foreign tax paid, as ThomasM125 mentions above, which should mitigate any US tax.
To use the "like-kind exchange" rule on your US tax return, very specific steps must be taken prior to the purchase of the new home including use of a "qualified intermediary". The US taxpayer can never take possession of funds when using a like-kind exchange for real property. Therefore, you won't be eligible for that on your US tax return, even though rules may differ for your Indian tax return.
For US tax purposes, though, you probably have a different basis in the new property - which is equal to the full value that you paid for it (there is no carryover of the basis of the old property).
This will reduce the gain on the sale of the new property, when that occurs.
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