Succession tax is not applicable in India. So if the taxpayer has inherited a house in a will or as a paternal property / mother from somewhere, then he is outside the purview of income tax.
Income Tax Saving: Succession tax is not applicable in India. So if the taxpayer has inherited a house in a will or as a paternal property / mother from somewhere, then he is outside the purview of income tax. But if the taxpayer sells this house / property or later makes it a means to earn income or interest, then he will have to pay tax on the earnings coming from them. Earnings from the sale of real estate are classified as capital gains.
Tax-saving through NPS: Income tax benefits explained in 10 points
Explain that the capital gains tax liability on immovable property depends on how long the property remained with the taxpayer. If the taxpayer is selling the immovable property after a holding period of more than two years, then the proceeds from this sale will come under the long term capital gains. But if the property has been with the taxpayer for less than 2 years, then the proceeds from its sale will come in short term capital gains and accordingly income tax will be created.
It is worth noting here that in the case of immovable property inherited to the taxpayer, its holding period is counted from the date of purchase of the property by the actual owner, and not from the date of the inheritance being given to another.
Tax deduction on capital gains made by selling property
Before the introduction of the Interim Budget 2019, after selling a residential house and buying a second house, tax deduction on the capital gains was received only when only one residential house was purchased with that money. But the provision changed in the Interim Budget 2019. The change is that if the taxpayer buys or builds two residential houses from the amount received from the sale of the house, then he can avail tax deduction on the capital gains on both the houses. But conditions are applicable with this provision-
1. This benefit can be taken only once in life.
2. The amount of long-term capital gains sold by the property should not exceed Rs 2 crore. If the amount exceeds Rs 2 crore, then this taxpayer will be able to take advantage of tax deduction only on the purchase of a residential house.
3. To take advantage of tax deduction on the money received from the sale from the property, it is necessary to buy another house within a certain time period. For example, in the case of a new ready to move house, within two years from the date of sale of the property, in the case of construction of another new house, within three years from the date of sale of the property.
You can also save tax like this
If the taxpayer wishes, capital gains can also be claimed by investing capital gains under Section 54EC of the Income Tax Act in capital gains bonds. The investment limit in capital gains bonds is up to Rs 50 lakh per financial year.
