Capital gain tax in India on property sale

Though, it’s great if you are going to buy or sell your property, but the real problem emerges when it comes about capital gain tax. Many of you would be oozing many questions regarding capital gains like if there is any solution to save it or how much you have to pay under this tax. No need to contemplate more, we are here to guide you. Let me clear first what does it mean by capital gain tax.

To put in other words, it’s a kind of profit, which is earned from the selling of capital assets for instance property, share etc. This tax is levied by income tax department. Capital Gain tax on sale of property can be categorized in two parts like STCG and LTCG. If the property is possessed by the seller for less than 3 years, then it comes in STCG which stands for Short Term Capital Gain. On the other hand, if the duration is increased then will belong to LTCG which mean Long Term Capital Gain.

To calculate Capital Gain Tax is not a tough at all. For example, we all tend to buy property and sell it later in order to gain a huge profit. You can also get to know your capital gains tax by a calculation. You just need to figure out the difference between the selling price and indexed purchase price like this “Capital Gain = Selling price- indexed purchase price”. In India, there are some kind of common formula to save the tax. For instance, the property is sold in pieces or it’s sold to relative at under-valued rate. LTCG are taxed at lower rates in comparison of STCG since the difference is based on the period of holding the property.

If it comes in the genre of unlisted shares and immovable property and it is hold more than 36 months then it becomes long-term assets. If you wish to save the capital gains tax then you must invest in various bonds, which is being offered by these entities like National Bank of Agriculture and Rural Development, National Highway Authority of India and Rural Electrification Corporation.

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