Since the right in the property is sold with less than three years of holding, it will be considered as short term capital gain with no indexation benefit. If you have any other short term capital loss during the same financial year (such as on sale of shares etc.), then the same can be set off against this short term capital gain. I do not think there is any other way you can save this tax.
Short term capital gain on property under construction
Sir, Can you please help me understand what will be the tax on selling a property which is under construction (not under my possession) and it sold before completion on 3 years? Since the property is owned by me, CA says that tax will be computed on whole capital gain and not even indexation will be considered. Is that true? Is there any way to save tax in this capital gain?
Asked 8 years ago in Capital Gains Tax
What is said by the chartered accountant is true. You will have to offer short term capital gains to tax with other income . secondly there is no indexation benefit for short term capital gains.
In case of short term capital gain indexation will not be available. In the present case since you have not received the possession of the property then it be be taxed under income from business or income from other sources, depends on your nature of business.
You can deduct from the sale proceeds any cost incurred for purchase, construction and commission paid on sale and purchase of the property.
Ask a Chartered Accountant
Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
Ask a CA