There are various types of taxes levied on properties such as Capital Gain Tax Service Tax, Stamp Duty & VAT. These taxes are also subject to states & districts where the project is located. In the given blog our property consultants will explain about Capital Gain Taxes.
Capital Gain
In case of property purchase, capital gain is applicable when the property is sold at a price higher than the price of possession or in other words, price appreciation has been registered.
Long Term vs Short Term Capital Gain
When a property has been held by someone for over three years, then Long Term Capital Gain (LTCG) Tax is levied. This tax can however be saved by investing the return in a property or property gain bonds. However, it should be noted that tax will be exempted only for the amount invested in property and/or property gain bonds.
Also the property invested should be residential property &/ or plot. In case of investment in commercial property/ agricultural plots, the tax cannot be exempted.
On the contrary when a property is withheld for less than 36 months, Short Term Capital Gain (STCG) is levied. This tax component could however not saved. It is added on the income of a person and tax is levied on the basis of general rules followed in accordance to the Income tax policy.
Rate of LTCG & STCG Taxes
In case of LTCG if the capital gains has not been invested into other property or capital gain bonds, then 20% of the gained amount has to be paid as taxes.
In case of STCG the sales proceed are included in the total income of the person and the taxes are paid in accordance to the income tax policy as mentioned above.
Document
In order to calculate the capital gain taxes, the sale deed or the purchase deed is considered as the valid document. In case the property transaction is done in installments, the date of possession will be used for such calculations.
Square Yards Customer Relationship Support
At Square Yards we understand that often buyers are not very well acquainted with the various nuances of the taxation process. Hence, our Customer Relationship team works alongside the buyers & handhold them through every tax related query, giving them a complete peace of mind.
