Tax Implications of Selling Property in India
Selling property in India involves various tax implications that sellers must be aware of to comply with tax regulations. This guide provides an overview of the tax considerations when selling property.
Capital Gains Tax
- Short-term Capital Gains: If the property is sold within 3 years of acquisition, gains are considered short-term and taxed at applicable income tax rates.
- Long-term Capital Gains: If the property is held for more than 3 years, gains are long-term and taxed at 20% with indexation benefits.
Exemptions and Deductions
- Section 54: Exemption on long-term capital gains if reinvested in another residential property within specified timelines.
- Section 54EC: Exemption by investing gains in specified bonds within 6 months of property sale.
- Cost Deductions: Deductible expenses include brokerage, legal fees, and cost of improvements to reduce taxable gains.
TDS (Tax Deducted at Source)
Buyers are required to deduct TDS at 1% for property sales exceeding ₹50 lakhs. Sellers must ensure TDS is deposited with the Income Tax Department.
Income Tax Filing
File income tax returns disclosing property sale details including gains, exemptions claimed, and TDS details to avoid penalties.
Consultation and Expert Assistance
For expert guidance on understanding and managing tax implications of property sales, contact our specialists at +91 911 891 1172.