In this article I will be writing about the tax liability on capital gains. Here I mean capital gains is the profit which you are making from selling your fixed assets like land or houses. Most of the people think that the profit from selling the property doesn’t come under the tax liability. That is not the correct opinion, anything you sold and making profit you will be liable to pay the tax. In this article I will be writing about the capital gains from your houses. I would like to hear feedback from you after reading the article. Please post your comments in the comments section. Please subscribe to our future articles here.
What is Capital Gains?
Any profit from selling the capital assets considered as the capital gains. So it can be shares, units of UTI, debentures and land. Also the following materials considered as the capital assets:
- furniture
- personal belongings
- agricultural land (subject to certain criteria)
- Special Bearer Bonds, 1991, Gold Deposit Bonds (1999 scheme), 6.5 per cent Gold Bonds, 7 per cent Gold Bonds, National Defence Gold Bonds issued by the Central Government and raw material held for the purpose of business is not termed as a capital asset.
- From the year 1973-74, jewellery is treated as a capital asset.
Types of Capital Gains
There is two types of capital gains.
Short Term Capital Gains
If you own the capital assets less than three years at the time of selling, then it is considered as the short term capital gains.
Long Term Capital Gains
If you own the capital assets more than three years at the time of selling, then it is considered as the short term capital gains.
Tax on Capital Gains
If you earn short term capital gains, then it will be added to your taxable income and will be calculated for the tax.
If you earn long term capital gains, then you will be liable for the 20% tax for your profit. But there is certain exemptions on the tax as follows:
- If you are buying new property with in next two years after selling your old property, you need to pay the tax.
- If you are started constructing new house within next three years after selling your old house, then you are not liable to pay the tax. Not that the value of the new house should be minimum of the capital gains.
Summary
In this article I have written about the capital gains and how you are liable to pay the tax for capital gains. This is only the basic knowledge on the capital gains. Still there is many place where the different scenario for calculating the capital gains. In my future articles I will be writing about those ideas. Thank you for reading this article. Please leave your comments in the comments section.
November 21, 2009 at 6:18 pm
Hello, I like this article. Can you please clarify my doubts
1. If I purchase a agricultural land within 2 years of sell of my old office building. Do I need to pay the tax again?
2. If I purchase a flat(under construction) within 2 years of sell of my old office building, do I need to pay capital gain tax?
3. If I sold my office building in Dec 2008 and if I need to pay capital gain tax, then what is the time limit.
December 22, 2009 at 12:38 am
If i sold sell shares worth Rs 10 lacs,how much tax i have to pay?but long term cap gain tax is free after 1 year 7 days,iam right?
December 22, 2009 at 1:03 am
Does long term capital gain tax from shares is exempted,if we sell the shares within 1 year 7 day we are liable for short term cap gain tax 15%, after 1 year 7 days it is exempted?is it true?
February 24, 2010 at 3:22 am
Hi Krishna,
My father puchased a land 20 year ago and it was registered on my name. Now it gave for development. Developer agreed to give 4 flats. I want to know how to calculate the Capital gain and how much tax should pay.
March 26, 2010 at 6:51 pm
hi
I have sold a flat in feb 2010. In sept 2009 I have invested in a flat which is still under construction. The LTCG that i have made from selling the flat is around 23 lakhs.
The new under construction house is costing me 32 lakhs. I have already made a payment of 11 lakhs for the new house in Sep 2009-Feb 2010. Rest payment would be done by dec 2010.
How do i save tax against the long term capital gains against the new property thats under construction. Can I show the entire cost of 32 lakhs in my tax returns when i file it by 31st July 2010 or can i just show 11 lakhs till july 2010 as the rest of the payment against the new house is yet to be given.
May 5, 2010 at 11:23 pm
In case of post office RD contiued for 10 yrs, are we liable to pay any tax. If yes then how much considering Rs. 2000/- monthly suscription.
April 23, 2011 at 10:42 pm
my friend have land at urban area & having NA land he want to go for development through Developer this year he will get 500 sq met carpet area .the land property is of 30 years old . pl inform when & how the long term tax will calculated if he dont want to sell any portion of constracted consideration
May 3, 2011 at 1:58 am
Hello Sir/ Madam,
I have purshased a property ( agreement value appr. 13 Lacs)before 2 years.
Now i want to resale it. But as per government valuation it is valued at Rs. 19 Lacs appr.
As i am reselling it within 3 years do i need to pay capital gain tax which is calculated at difference of agreement value.
This property is belongs to me and my mother who is cinior citizen.
Kindly advice if there is any law for cinior citizens or do i need to wait for 3 years completion.
Please advice
Regards,
Sushant
May 3, 2012 at 6:43 am
Option 1:you can get exemption as per taxable rules as a seniour citizen as the income(profit) from the land selling will be added to the taxable income to your parents . and Tax will be calculated accordingly .for tax exemption for your mother (if she is a primary holder ) you have to show the % tage of your share in tax exemption. Capital Gain from the property will be accounted acordilgly(considering both the owners )
Option 2: wait for 1 more year and then invest the money in buying another property with in 2 years or construct your house within 3 years from selling. for the mean time keep the money in Special saving bank account for capital gain whose interest is same as that of saving account but use the money within 6 months else will be taxed as per capital gain.
Option 3:Put the long term capital gain money in bonds which is redemable afer 3 years , Interest on bonds is taxable
July 5, 2011 at 9:36 pm
Hai Krishna,
I Have a doubt? Do we want to pay tax for capital gains from mutual fund investment (long term)?
rgds,
rinu
September 3, 2011 at 10:17 am
hi , we have sold a agri land within corporation limit , and bought agri land and doing agri , should i pay capital gain tax
thanks
srini
September 6, 2012 at 4:33 pm
Hi,
I work in a US based company, registered in NASDAQ.
I have sold RSU stocks issued by company using charles schwab and money got transferred to INDIA account.
All these stocks got vested to be before a year. So i guess i will be subjected to long term capital gains tax.
If i invest this money in buying a house , will that be excempted from capital gains tax ?
November 13, 2012 at 2:59 pm
Hi,
This article has factual as well as grammatical errors. Please go through it before publishing it.