Tax on property sale

Hi,

Hope you are doing well !!

You will be liable to pay LTCG tax@20% plus applicable surcharge and cess.

To calculate the long-term capital gains tax payable, the following formula is to be used:

Long-term capital gain = full value of consideration received or accruing – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where:

Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Indexed cost of improvement = cost of improvement x cost inflation index of the year of transfer/cost inflation index of the year of improvement.

How did you get loan of 12 lakh for a property registered at 7 lakh.

Anyways after applying cost of indexation your capital gain would be around 19 lakh and tax payable would be around 20% i.e. 3.8 lakh.

You can save tax by investing in bonds u/s 54EC.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Hi,

- There will a long term capital gain of Rs.18.25 lacs and tax would be Rs.3.80 lacs.

- Sale consideration -Indexed COA= 35-16.75

- ICOA- 7/117*280=16.75

Thanks

You are liable for tax on long term capital on sale of house as it is held for more than 24 months before sale. There are mechanics given under Indian tax for calculating long term capital gains. The capital gains would be sale price less the indexed cost of acquisition.  The cost would be the actual cost as incurred to buy that property. Indexation is a cost inflation index which is notified by the Govt.  It is done to adjust for inflation over the years. This increases one’s cost base and lowers the capital gains. The gains so arrived at are taxable at 20%.  PLease note that there could be liability to pay advance tax by you.  Also, do submit your tax return by 31 JUly. 

Hi Thomas

Ideally, the property should have been registered at actual consideration only. You may be liable to pay additional stamp duty if such transaction is caught up.

For capital gain calculation, the registration value shall be considered as cost of acquisition of the property. Post indexation of such COA, capital gains shall be calculated. Considering no other costs of improvement or transfer, capital gains come to around 18.25 lacs.

Capital gains are chargeable to tax @20% plus cess which makes tax liability to be around 3.8 lacs.

You may opt for reinvestment options in another residential house property or 54EC eligible bonds for claiming exemption from capital gains.