Calculate property capital gains tax
Short-term (held <2 years): added to income, taxed at slab rate. Long-term (held >2 years): 20% with indexation benefit. Indexation adjusts purchase price for inflation, reducing taxable gains.
Indexed Cost = Original Cost × (CII of sale year ÷ CII of purchase year). CII (Cost Inflation Index) is published by government. This reduces taxable gain by accounting for inflation.
Reinvest in another house (Section 54), invest in capital gains bonds (Section 54EC) within 6 months, or use Capital Gains Account Scheme if new property not yet purchased. Each has specific rules and limits.
Deductible: registration costs when buying, renovation/improvement costs (with receipts), brokerage on sale, and legal fees. Keep all receipts—they reduce your taxable gain.
Tax is due in the assessment year following the sale year. Pay advance tax if gain is significant. File ITR with details of sale, cost, improvements, and indexation. Consult a CA for complex cases.
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