4 Replies to “Explain capital gains tax on sale of house in India?”

  1. The rules are slightly different when it comes to real estate.

    Yes, you are subject to a capital gains tax, but on the difference between the sale price and the inflation adjusted purchase price.

    Eg, you buy a flat for Rs 20 Lakh last year and you sell it for 30 L this year, the inflation adjusted purchase price (assuming 12% inflation) would be Rs 22.4 L. The capital gains tax would be on (30 – 22.4 = 7.6 lakh) gain which you have made.

    But if you reinvest the proceeds after sale (30L) into another real estate property, there would be no capital gains tax.

  2. Income Tax Rate on Long Term Capital Gains (section 112)
    1. Long term capital gain is taxable at a flat rate of 20%.
    2. If long term capital gain is covered by section 115AB, 115AC, 115AD or 115E, the tax rate is 10%. Also, if the listed securities/units are transferred and the benefit of indexation is not taken, then long term capital gain is 10%.
    3. Deductions under sections 80C to 80U are not available on the long term capital gains.
    4. Section 112(1)a provides some relief to resident individual and HUF.
    5. If the transaction (after September 30, 2004) is covered by securities transaction tax, then the capital gain is not chargeable to tax (section 10(38)). (Conversely, long term capital loss, is such cases, is taken as equal to zero.)

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