Save Tax After Selling Property
Capital Gain
Profit or gains arising out of sale / transfer of a capital asset is chargeable to tax under head "Capital gain". However following assets not considered as capital assets-
1. Any stock-in-trade
3. Rural agricultural land in India.
2. Movable personal property (including wearing apparel and furniture) held for personal use (Excludes - jewellery, archaeological collections, drawings, paintings, sculptures or any work of art is capital asset)
4. Deposit certificates issued under the Gold Monetisation Scheme, 2015
Save tax by investment in following manner
If a person earn gain from transfer of capital assets then he will be liable to pay income tax on such gain. However gain from transfer of capital assets can be save by following manner-
| Section |
Capital Gain from sale of following Assets |
Save tax by invest in following Assets/Property | Conditions and Restrictions |
| Section-54 |
Long term capital gain from sale of residential property (Applicable to Individual / HUF) |
Save tax by purchase one Residential house property in India If Long term capital gain is less than 2cr then you can purchase 2 house property |
Purchase within 1 year before or within 2 year from date of sale old property or construction within 3 year from date of sale of old property.
|
| Section-54F | Long term capital gain from sale of capital asset (Should not own House Property) (Applicable to Individual / HUF) | Save tax by purchase one Residential house property in India | Purchase within 1 year before or within 2 year from date of sale old property or construction within 3 year from date of sale of old property. Lock in period 3 years (Can not sale new house within 3 year) |
| Section-54B | Long term capital gain/Short term capital gain from sale of Urban Agriculture Land (Applicable to Individual / HUF) | Save tax by purchase any Agricultural Land (Urban/ Rural) | Purchase within 2 years from date of sale of old property. Lock in period 3 years (Can not sale new assets within 3 year) |
| Section-54D | Long term capital gain/Short term capital gain from Compulsory acquisition of Industrial Land & Building (Applicable to any person) | Save tax by purchase new land / buildings for Industrial Undertaking |
Purchase within 3 years from date of sale of old property.
|
| Section-54EC | Long term capital gain from Sale of Land / Building / Both (Applicable to any person) | Save tax by invest in NHAI/ RECL / PFCL / IRFCL Bonds Lock 5 Yrs (Redemption Period) | Invest within 6 month. Maximum exemption is Rs 50 lakh. |
| Section-54EE | Long term capital gain from any Capital Asset (Applicable to any person) | Save tax by invest in units of Funds |
Invest within 6 month. Maximum exemption is Rs 50 lakh |
| Section-54G | Long term capital gain/Short term capital gain from Shifting of undertaking to Rural area (Applicable to any person) | Save tax by purchase new plant or machinery/building/ land / incurring notified expenses |
Invest within a period of 1 year before or 3 years after the date of transfer.
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| Section-54GA | Long term capital gain/Short term capital gain from shifting undertaking from Urban to SEZ (Applicable to any person) | Save tax by purchase new plant or machinery/building/ land / incurring notified expenses |
Invest within a period of 1 year before or 3 years after the date of transfer. Lock in period 3 years (Can not sale new assets within 3 year) |
Period of Holding
Following is the period of holding to determine whether gain from assets is short term or long term gain.
| Nature of capital assets | Short term capital gain | Long term capital gain |
| Listed Securities, Units of Equity Oriented Mutual Fund, Unit of UTI, Zero Coupon Bond |
Held for less than 1 year | Held for more than 1 year |
| Unlisted Share, Immovable Property | Held for less than 2 year | Held for more than 2 year |
| Unlisted securities, Other capital asset | Held for less than 3 year | Held for more than 3 year |