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Capital Gains Tax India on Sale of Residential Property

  1. pankaj3625 profile image73
    pankaj3625posted 7 years ago

    Capital Gains Tax India on Sale of Residential Property

    Can somebody please help me understand the income tax treatment of capital gains tax on sale proceeds of residential property?

  2. soni2006 profile image79
    soni2006posted 7 years ago

    Capital gain from Sales of Residential Property is taxed as long term or short term capital gain depending on the period of holding. Long-term capital gains are taxed at 20% and short-term capital gains are taxed at normal rates. One can avail exemption from capital gains if the person invests the capital gains in buying another property or in specified bonds within a specified period of time.

  3. pankaj3625 profile image73
    pankaj3625posted 7 years ago

    Lets take an example.
    ·    I own a house, which has a market value of 5 lacs.
    ·    I bought it 10 years ago, when it was worth 1 lac rupees.
    ·    The registered price of the house was 0.5 lacs.
    ·    And now after the indexing and all, it’s actual cost has come to 2 lacs.

    Please tell me how can I treat the additional income earned by me (5-2= 3 Lacs)?

    I suppose that the differential between the Registered value (1 Lac) and Today's value (2 Lacs) which is 1 Lac is taxable as long term capital gains, until I invest it somewhere, but what about those 3 Lacs that I have earned?

    Is that income shown somewhere to the Tax Authorities and under what head? And if not, how can I buy another property with those 3 Lacs (as I will have to anyways reveal the source of funds to Income Tax Department)

    Also, how can I utilize those 3 Lacs, such that I don't have to pay 60 Lacs (@20%) as tax? A bit lengthy, but that's what I need to know. Can you help Soni?

  4. soni2006 profile image79
    soni2006posted 7 years ago

    Question: Can you please help me understand income tax treatment of capital gains tax on sale of residential property in India?
    Lets take an example.
      I own a property in Delhi that has a market value of 5 lakhs INR.
    I purchased it around 10... read more

 
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