Navigating Capital Gains on Property & Land Sales: A Comprehensive Guide
Understanding Capital Gains: Profits from selling assets like property are subject to taxation.
Types of Capital Gains: Long-Term (held >24 months) and Short-Term (held ≤24 months).
Taxation on Property Sale:
Long-Term: Taxed at 20% with indexation benefits.
Short-Term: Taxed at applicable slab rates.
Calculation Considerations:
Sale Consideration: Higher of sale value or stamp duty value.
Transfer Expenses: Sale-related expenses deducted from consideration.
Indexed Cost: Adjusted for inflation using Cost Inflation Index (CII).
Exemptions: Under Sections 54 to 54GB for reinvestment in specified assets.
Handling Under-Construction Property Rights:
Transfer Before 36 Months: Short-term gains taxed at slab rates.
Transfer After 36 Months: Long-term gains taxed at 20% with indexation.
Loss Offset & Carry Forward:
Short-Term Loss: Set off against both short-term and long-term gains.
Long-Term Loss: Set off only against long-term gains, carry forward up to 8 years.
Reporting Income:
Due Date: File by July 31 of the Assessment Year.
ITR Form: File ITR-2, report gains in Schedule CG.
Saving on Tax:
Offset Gains: Utilize losses from other assets.
Exemptions: Reinvest under Sections 54F, 54GB, 54EC, or 54EE.
Inherited Property: Calculate tax based on indexed cost of acquisition by previous owner.