During the epidemic, many people have sold or are planning to sell residential property for money. They need to know how much tax liability is made on the profit from the sale. The Income Tax Department can also send you a notice. Pramod Tiwari is showing its calculation and measures to save tax
Income tax expert Girish Narang says that tax is calculated in two ways on the profit from selling a house. If you have sold the house after keeping it for two years, then it will be considered as a long-term capital gain.
But if you have sold the house before 24 months, then it will be considered as short term capital gain. There is no way to save tax on this, as it will be treated as your additional income and tax will be calculated according to your slab.
If your final tax liability is created after all types of investments, then you can invest the amount of long-term capital gains in life insurance, mediclaim, PPF etc. Also, there will be benefit of indexation relative to inflation.
Income
tax can be saved by buying a second house . Under Section 54 of Income Tax, you can save tax by applying the amount of profit in buying another house. This rebate will be available for purchase of second ready move home within two years of the sale. If you have bought another house even before one year of selling the house, then it will also get a discount. If this amount is not more than two crores, then one can also use it to buy two houses. This facility is available only once.
Savings on house construction
If you build a new house within three years from the sale, you can save tax by including long term capital gains in its cost. However, it must be ensured that possession is achieved within three years. Newly purchased property cannot be sold for three years otherwise the rebate taken will be added to your income.
Invest in government bonds
Within 6 months from the sale, you can save tax by investing in government fixed bonds. Can invest in capital gains bonds of NHAI, Rural Electrification Corporation, Railway Finance Corporation etc. You can invest up to 50 lakhs in a financial year and the lock-in period will be 5 years. During this time they cannot be redeemed or pledged.
Information to be given in the return …
Even if you get two to three years to invest the profit made from the sale of the house, it has to be given in the ITR to be filled after the sale. -Archit Gupta, Founder-CEO, Cleartax
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