Real Estate Taxation

Gains or Losses that arise from the sale of any capital asset like property, shares, securities, gold etc are subject to capital gains tax under the provisions of the Income-tax Act. No implication on purchase of property under Income tax.

Overview of taxation on sale of property

Gains or Losses that arise from the sale of any capital asset such as property, shares, securities, gold, etc. are subject to capital gains tax under the provisions of the Income-tax Act. There are no implications in the Income-tax Act upon purchase of a property.

Nature of capital gains

If the property is held for 36 months or less, the resultant gain is called Short-term Capital gains. If the property is held for more than 36 months, the gain is referred to as long-term capital gain. The short-term capital gain is taxed at the normal rate of tax (i.e., at slab rates for individuals and 30% for companies) while the long term is taxed at 20%, subject to certain conditions.

Let’s now look at how to compute capital gains.

Computation of Capital Gains

The basic format for the calculation of capital gains is laid out in Table 1.