How To Save Tax On Long-Term Capital Gains

By Kavya Balaji | February 9, 2018

To save more on your long-term capital gains, you need to plan your taxes right. Here’s how to do it.

How To Save Tax On Long-Term Capital Gains

The Budget in 2018 has brought the focus back on Long-Term Capital Gains (LTCG). If you didn’t know, LTCG on equities that is more than Rs. 1 lakh will be taxed at 10% from the next financial year 2018-19.  This applies to both shares and equity Mutual Funds. There’s nothing much that can be done to save on LTCG tax in case of equities. However, there is hope for those who have to pay LTCG tax on property transactions.

Property is a preferred investment for many in India. When a property is bought and then sold for a profit, LTCG tax has to be paid. The amount of tax that you pay, however, will depend on a couple of factors. One of these is the amount involved in the sale and purchase of the property. As this amount generally tends to be quite high, the resultant tax amount will also be high. Since this can be a burden to investors and to encourage investments in properties, the Government of India has laid down several alternatives for getting tax exemption for LTCG under the Income Tax Act.

Short-Term Capital Gains (STCG) & LTCG

Planning your capital gains right is an important part of selling a property. But you have to understand certain terms before that. Two important terms that you need to know before computing the net tax liability for your capital gains are STCG and LTCG. When you sell a property that’s been held for 3 years or less, it attracts STCG tax, when sold at a profit. Similarly, if you sell a property that’s been held for more than 3 years, you will pay LTCG tax.

Additional Reading: Avoid Real Estate Scams To Reap Rich Returns

In case of an STCG transaction, the gain is added to your income and taxed as per the income tax bracket you fall under. For instance, if a taxpayer falls under the tax slab of 30%, the STCG will also be taxed at the rate of 30%. This amount is not eligible for any kind of exemption.

On the other hand, if the taxpayer is liable to pay the LTCG tax, there are several provisions available that can help reduce the tax burden arising from these transactions. Some of these are indexation benefits, lower tax rate and deductions available as per the Income Tax Act.

To reduce the tax burden, indexation takes into account inflation in its calculations by using the Cost Inflation Index. The tax rate of 20% on LTCG brings down the amount of tax payable significantly when compared to STCG tax (which is 30%). Apart from this, there are several exemptions and deductions available to reduce the LTCG tax burden of a tax payer. These deductions are available in the following circumstances:

  • LTCG arising on the sale of a residential unit and investment made in a new residential unit.
  • LTCG arising due to the sale of an agricultural land and investment made in new agricultural land.
  • LTCG arising on the compulsory acquisition of land and buildings of an industrial undertaking and investment made for the purchase of land or building in order to shift or re-establish the industrial undertaking.
  • LTCG arising due to the transfer of machinery or plant or building or land of an industrial undertaking situated in an urban area and an investment made for machinery or plant or building or land for the purpose of shifting the industrial undertaking to any area other than an urban area.
  • LTCG arising on sale of an asset other than a residential unit and investment made in a residential unit.

How to save LTCG tax

Investment in residential property within a specific time frame (Section 54/ 54F):

As per income tax provisions, LTCG arising from the sale of a capital asset (residential or non-residential property) is exempted under Section 54/54F, if the net sale proceeds are invested in the purchase or construction of a residential property, subject to the following conditions:

Condition (i): The investor/seller should use the funds from the capital gains to purchase a new residential house within 1 year before or 2 years after the transfer date (sale/transfer of the original property).

Condition (ii): If the investor intends to invest the money in an under-construction residential property or construct a residential property, the construction needs to be completed within 3 years from the date of transfer of the original property.

Additional Reading: 5 Localities In Mumbai That Will Make Your Real Estate Investment Boom

Condition (iii): The investor should not own more than one house (other than the new house) on the date of sale or purchase or should not construct any residential house (other than the new house) within a period of three years, after the sale date.

Condition (iv): The investment in new residential property has a lock-in period of three years. If the new property is sold within a period of three years, the exemption claimed with respect to the old property shall be revoked and the capital gains will become taxable.

Condition (v): If the amount invested for buying a new house is less than the capital gains, then the maximum amount of tax exemption will be restricted to the proceeds from LTCG invested for buying a new house. In other words, the maximum exemption cannot exceed the amount of LTCG made. The balance amount of LTCG (after investing in new property), if any, is taxable at 20%.

Condition (vi): As per the Union Budget for FY 2014-15, for availing the benefit of LTCG tax exemption, the investment should be made only in one residential house property situated in India, not abroad.

Deposit funds under the Capital Gains Account Scheme (CGAS):

To avail tax benefits, the capital gain should be re-invested in a residential property before filing the income tax return for that year. If you are unable to find the right property or you invest that money in another property before the due date (usually 31st July) of filing your tax return, then the unutilised LTCG can be deposited under the Capital Gains Account Scheme (CGAS). Taxpayers can avail exemptions under the CGAS only when the amount of capital gain, or net consideration, is deposited by the last date for filing the income tax return.

There are 2 categories of CGAS:

Deposit Account Type A: All deposits in this account are in the form of savings. This account is suitable for taxpayers who want to construct a house in tranches as withdrawals are permitted according to the provisions of the scheme.

Additional Reading: Real Estate Investing 101

Deposit Account Type B: This account is similar to a term deposit as it is payable after a fixed time duration. The depositor can opt for cumulative or non-cumulative deposits. Withdrawals from this account can be made only after a stipulated duration.

The capital gains account, however, is only a temporary arrangement to park your funds for 2-3 years. The withdrawals from these accounts should be made for purchasing/constructing a residential property only.

Investment in bonds (Section 54 EC):

LTCG arising from the transfer of any long-term capital asset are exempt under section 54EC. For availing this exemption the investor, within a period of 6 months of the sale, should invest the capital gains in notified bonds issued by the authorities such as National Highways Authority of India (NHAI) or Rural Electric Corp. (REC) Ltd for a minimum period of 3 years. This is restricted to Rs. 50 lakh per financial year. These bonds are also known as capital gain bonds.

An investor who wishes to claim the exemption from LTCG tax has to invest the LTCG in capital gain bonds within 6 months from the date of sale (of property) or before the due date of filing income tax return (usually 31st July), whichever is earlier.

The interest rate offered on these bonds was 5.25% as of 2017 and you have to pay taxes on the interest income from these bonds.

Tax treatment for capital gains is different from taxation of regular income. It is important for an investor to be aware of the computation and the availability of various options to save on tax liability. If investing in a residential property is your choice, funding a part of your purchase using Home Loan will help you save more taxes.

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247 thoughts on “How To Save Tax On Long-Term Capital Gains

  1. Abhishek

    Hi Sheetal,
    I need some advice from you.I am planning to buy one Land for investment purpose in my home town in(U.P.).I want to sell it after 2-3 years and buy one flat (2bhk) in Bangalore/Pune. I am worried about the Capital gain tax .I want to buy the flat before selling the land and later sell the land and use thate money to pay the loan amount. Will I be exempted if I invest the money which I receive from sale of land into buying the Flat.Also I want to buy the flat in next 1-1.5 years and sell the land around after 3 years.So will that be a problem as I have read that I can apply for exemption from Capital gain tax if i have bought the house only 1 year before or 2 years after selling the land.

    Please advice me I am confused and need your help.

    Reply
    1. Team BankBazaar

      Hi Abhishek,
      You can claim a tax exemption under Section 54 of the Income Tax Act if the entire profit from the sale of your house is used to buy another house within 2 years or if you construct a house within 3 years. If a part of the profits are used, the tax exemption will be proportionately calculated. In case you are unable to make such a purchase within the stipulated time you can leave it in a Capital Gains Account and avail of the exemption later. There are are two types of accounts – one is a savings account and another a deposit account. Both of them have interest rates similar to a bank savings or a Fixed Deposit account. To know more, read our blog posts on How to save on Capital Gains Taxes when selling a property and All about Capital Gains Taxes.

      Reply
  2. Saurabh

    Hi Sheetal,

    Thanks for sharing this information. I have recently sold my property at a profit and I am planning to buy a new one with that money. And it will probably take around 6 to 9 months.
    Since there is no point in keeping the money idle in the bank for 6 months, I was thinking about investing this money in Fixed Deposit for 6 months and later on buy the new property.
    Now I wanted to know is it possible to invest the capital gain money in Fixed Deposit without getting the Long Term Capital Gain Tax on it or I can invest only in the NHAI or REC bonds. The reason I am asking this is because I only need to put my money in the bank for 6 to 9 months, and it will be better to get additional interest on it. Also if you could share how much interest I will get from Capital Gain Account Scheme and if it is same as Fixed Deposit, then I can put money there for time being.

    Appreciate your help.

    Regards,
    Saurabh

    Reply
    1. Team BankBazaar

      Hi Saurabh,

      Thanks for writing to us. In case you are unable to purchase a new residential property within the stipulated time, you can leave it in the Capital Gains Account and avail the exemption later. There are two types of accounts – one is a savings account and another a deposit account. Both have interest rates similar to that of a savings bank account or FD. You can claim tax exemption under Section 54 if the entire profit from the sale of the house is used to buy another house within 2 years or if you construct a house within 3 years. If only part of the profits is used, the tax exemption will be proportionately calculated.

      Cheers,
      Team BankBazaar

      Reply
  3. Abhisek

    What is the minimum period of capital gain investment and taxable income . It is understand that investment of capital gain for investment in prop is 2 years n 3 years for construction.

    Reply
  4. Bk Malik'

    How is the tax treatment of capital gains is different from regular income ?
    Please clarify.
    Bk Malik

    Reply
  5. Dolfi

    I had purchased a flat in Thane – Mumbai in 01.01.1997 for Rs.1.50lacs and now I have sold the flat for Rs.9lacs. I am 50 yrs old. Now I will not get any home loan from banks, I thought of buying land, but my budget is 5lacs only. Balance I have to repay my credit card balance which is 2lacs. Can you please help me , can I deposit the amount of Rs.5lacs in SBI fixed deposit which is for 5yrs. or suggest me
    Dolfi
    9890943458

    Reply
    1. Team BankBazaar

      Hi Dolfi,

      Thanks for writing to us. You can claim a tax exemption under Section 54 if the entire profit from the sale is used to buy another house within 2 years or if you construct a house within 3 years. If a part of the profits is used, the tax exemption will be proportionately calculated.You could also put the money into capital gains bonds. If you deposit the amount in a 5-year FD, the amount will not be exempt from capital gains tax. For more information, you can check these links How To Save On Capital Gains Taxes When Selling Property and All About Capital Gains Taxes

      Cheers,
      Team BankBazaar

      Reply
  6. parag

    I bought a residential property X in 2006-2007 for 22 lacs. I bought another residential property Y in 2012-2013 for 19 lacs. Now I want to sell property X for 170 lacs in 2016-2017 out of which the long term capital gains is 125 lacs so can I invest this amount to buy another residential property to save tax?

    Reply
    1. Team BankBazaar

      Hi Parag,
      Thanks for writing to us. You can claim tax exemption under Section 54 if the entire profit from sale of house is used to buy another house within 2 years or if you construct a house within 3 years. If part of the profits are used, the tax exemptions will be proportionately calculated. For more information on capital gains and how to save on capital gains when selling property, click here and here.

      Cheers,
      Team BankBazaar

      Reply
  7. SS

    Hi, what if the transfer of all assets happens in one financial year at one time, but the proceeds are received over 2 financial years after that? Can 54EC bonds be invested in only once witjin 6 months after the sale? Or can it be used again after the second installment of the proceedsnin rhe next fianancial year?

    Thanks

    Reply
    1. Team BankBazaar

      Hi SS,
      Once a capital asset is sold, you need to invest in capital gains bonds within 6 months of the date of transfer of the asset. You also have the option of keeping the funds in a Capital Gains Account before filing your income tax returns for the Financial Year in which you sold the property.

      Cheers,
      Team BankBazaar

      Reply
  8. ravi

    Please guide my first home owner is only myself my second home bought first name is wife and second myself as owner and loan borrower
    can I repay the loan amount taken for second home to save capital gain tax after selling first home
    thanks

    Reply
    1. Team BankBazaar

      Dear Ravi,
      Thanks for writing to us. It is not possible to use capital gains from one property to close your loan for a second property without paying capital gains tax. You need to pay capital gains tax on your first home and the profits that are left over can be used to prepay your second Home Loan.

      Cheers,
      Team BankBazaar

      Reply
    1. Team BankBazaar

      Hi Ravi,

      We’d be glad to help you if you tell us your query!

      Thanks,
      Team BankBazaar

      Reply
  9. A K SAKSENA

    Hi Sheetal,
    I have purchased property X in 1994 and a property Y in 2000. In 2013, I have booked a flat (property Z) the amount of which is payable in installments & so far I have already paid around 30% of the cost from my savings (retired person). Completion expected in 2 years from now.
    If I sell property X in 2016 and invest this amount in Property Z as per the installments demanded, will the proceeds of X qualify for tax exemption (including 30% amount I have paid so far)?
    If not, can I sell both X & Y and purchase another fresh property from the total proceeds of X & Y?
    Regards.

    Reply
    1. Team BankBazaar

      Dear Saksena,
      Thanks for writing to us. You can save on capital gains tax only if you use a capital gains account (while you search for a suitable property to invest in), invest in certain bonds or purchase another property. It is not applicable to a property that has already been purchased. You may, however, sell your properties ( X and Y, as mentioned by you) and invest in a new one.

      Cheers,
      Team BankBazaar

      Reply
      1. A K SAKSENA

        Thanks for your guidance.
        All the points are clear.
        The other point as I understood is that if I have purchased a second flat after taking a loan , I can not repay from the capital gain of the first flat sold afterwards within one year of purchasing the second flat.
        Regards.

        A K SAKSENA

        Reply
        1. Team BankBazaar

          Dear Saksena,
          You would need to sell the first property before purchasing the second property and not the other way round. Hope this makes things clear. Keep reading our blog for more articles like this.

          Cheers,
          Team BankBazaar

          Reply
          1. A K SAKSENA

            If the first property is to be sold before purchasing the second property, then what is the meaning of: Capital Gain Tax exemption is applicable if the property is purchased one year before or 2 years after selling the property?

          2. Team BankBazaar

            Dear Saksena,
            As per the details provided to us in a previous comment, you purchased the property in 2013 (that is 3 years ago). Hence, you may not be able to take advantage of Capital Gains tax exemption. The date of allotment of the property/flat is usually considered as the date of purchase. Please check with your legal counsel for further clarification.

            Cheers,
            Team BankBazaar

  10. Ajay

    Dear Sir
    My mother purchased a residental land in 1988 and now she wants to sell this land in current F/Y 2016-2017. She owns a one residental house. How can she save long term capilal gain . Please advice.

    Thanks

    Regards
    Ajay

    Reply
    1. Team BankBazaar

      Dear Ajay,
      Thanks for writing to us. You can save on capital gains by either investing in capital gains bonds or by putting the money in the capital gains account. Our blog post gives you the specifics.

      Cheers,
      Team BankBazaar

      Reply
  11. Singh

    Hi,
    Need your help & advice.

    Myself (A) & Spouse (B) own a property in thane in the jt. name, where my self being the first owner.
    Its more than 3 years of holding the residential flat so I can get capital gain exemption on sale of this old property, and assuming the capital gain amount is 25 lacs.

    Query 1, seller of old property are Self (A) & spouse(B). Self being the first owner and spouse being the second owner.
    Capital gain amt rs. 25 lacs used to buy new residential property in the names of Self (A) & Mother (C).
    (A)Self being the first owner and a common person in both the properties , can the LT Capital Gain exemption can be taken by Self (A) in this above purchase of res. ppty ?

    Query 2.
    are there restriction on number of properties already owned by the seller to claim LTCG? Pls throw some light on this

    Thank You in advance.

    Reply
    1. Team BankBazaar

      Dear Singh,
      Thanks for writing to us. Regrading your first query, you can claim capital gain exemption since you are the first owner. Regarding your second query, there is no restriction to the number of properties that you can own. Hope this helped.

      Cheers,
      Team BankBazaar

      Reply
  12. Jack

    Hi,
    I’m from goa. I have a query of capital gains tax.
    I sold my flat last year on april 2015. And I’m selling my shop also in August this year. I had put all the amount which I have got from the sale of my flat in my loan account. And i have still loans To pay. I will also put half of the amount wich I will get from the sale of my shop in my loan accounts. In the loan account I have personal loan and my car loan. Am I lieable to pay any capital gains tax?

    Reply
    1. Team BankBazaar

      Dear Jack,
      Thanks for writing to us. You will have to pay capital gains tax if you incurred capital gains, that is, sold your property for more than what you bought it for.

      Cheers,
      Team BankBazaar

      Reply
      1. Jack

        Even if i put all the money which I have gained to write off my loan?

        Reply
        1. Team BankBazaar

          Dear Jack,
          Thanks for writing to us.You need to pay capital gains tax if you have made a gain on the sale of your property. Repaying your loan (with the money you have received from the sale of property)has nothing to do with your capital gains tax.

          Cheers,
          Team BankBazaar

          Reply
          1. Jack

            Thanks sir.
            But i still have a doubt. I purchased a shop in 2001. At Rs 500000/- five lakhs. Now I’m selling it for Rs 2500000/- twenty five lakhs. I will put all the money which i have gained i.e. Rs 20lakhs to write off my loans. Will i have to pay capital gains tax in this case? if i have to pay. but i don’t pay what will happen? Because i will not have money to pay the tax. I am selling the shop to write off my loans.

          2. Team BankBazaar

            Dear Jack,

            When you consider indexation for your property sold, the tax amount will be quite low. You need to use the Cost Inflation Index to find the how much 5 lakh is 2001 is worth today. Subtract this from your cost of sale and apply capital gains tax of 20% on that amount.

            Cheers,
            Team BankBazaar

  13. Rajesh Shankar

    Dear Sir,
    How will the sale proceed of an inherited property be taxed ? Say for instance the property of A who deceased was transferred to B C and D jointly and they together sold it to a customer.

    Regards

    Reply
    1. Team BankBazaar

      Dear Rajesh,
      Thanks for writing to us. It would be best to have your legal counsel give you specific advice regarding this transaction as there are several people involved.

      Cheers,
      Team BankBazaar

      Reply
  14. Jack

    Thanks sir.
    But i still have a doubt. I purchased a shop in 2001. At Rs 500000/- five lakhs. Now I’m selling it for Rs 2500000/- twenty five lakhs. I will put all the money which i have gained i.e. Rs 20lakhs to write off my loans. Will i have to pay capital gains tax in this case? if i have to pay. but i don’t pay what will happen? Because i will not have money to pay the tax. I am selling the shop to write off my loans.

    Reply
    1. Team BankBazaar

      Dear Jack,
      The answer is, yes. You are liable to pay capital gains tax. It doesn’t matter how you use the money you received by selling the property. You might get notice from the Tax department for non-payment of the tax.

      Team BankBazaar

      Reply
  15. Rakesh

    Hi Team BankBazaar,

    I am from Bangalore. I had bought a residential property for Rs. 29.5 lakhs in Oct 2009 and sold the same in May 2016 for Rs. 49.8 lakhs. Approcimately what would be Captial Gain for this transaction based on indexation. Please confirm.

    Also I have shortlisted one residential property for immediate purchase. I want to invest 100% of Capital gain for buting this property. In this case, is this required to save funds in Capital Gains Account Scheme.

    Please advise.

    Regards
    Rakesh

    Reply
    1. Team BankBazaar

      Dear Rakesh,

      Thanks for writing to us. You need to calculate the indexation for your property based on the Cost Inflation Index. This is how you find out what Rs.29.5 lakh (in 2009)is worth today. Then you need to subtract this from Rs.49.8 lakh to get the amount on which you should calculate capital gains tax. It is currently 20%. If you invest in another property immediately, you will not be required to invest in capital gains bonds or the capital gains account.

      Cheers,
      Team BankBazaar

      Reply
  16. Suresh Mangalore

    I am a Non Resident Indian and have been abroad since January 1980.
    I own a 3 BHK apartment in Prabhadevi. The apartment was purchased in the year 1978.
    Now, I need to sell the house because I continue to live abroad.
    I propse to purchase a smaller apartment (2 BHK or 1 BHK)
    Balance amount needs to partly sent abraod and the rest for investment in India in NRE Rupee deposits.
    Kindly advise the strategy to achieve these objectives with minimum tax liability.
    Kind Regards
    Suresh Mangalore

    Reply
    1. Team BankBazaar

      Dear Suresh,

      Thanks for writing to us. You will be liable to pay TDS as well as long term capital gains tax at 20%. Just like anyone else, you can choose to save on the tax through Sections 54, 54F and 54EC which we have written about in the article. Contact your chartered accountant for further details.

      Cheers,
      Team BankBazaar

      Reply
  17. PUNDKL

    MY MOTHER SOLD PROPERTY FOR 48.0 LAC IN JUNE 2015 AND THE AMOUNT IS IN SAVING ACCOUNT , CAN I BUY UNDER CONSTRUCTION FLAT IN JUNE 2016 CAN I GET IT EXEMPTION FOR SAME .OUR PRESENT RESIDENTIAL HOUSE IS ON MY MOTHERS NAME OR SHOULD I BY ON MY NAME?

    Reply
    1. Team BankBazaar

      Dear Pundkl,

      Thanks for writing to us. As the first property was in your mother’s name, if you want to save on paying Long Term Capital Gains on the sale of the property, the new property also needs to be in your mother’s name.

      Cheers,
      Team BankBazaar

      Reply
  18. Jith

    Hi,

    I have made investments in equity mutual fund 4 years back for rs.25L and the current worth is around Rs.40L. I would like to sell it and would be re-investing in equity funds itself (want to eliminate low performing funds). In this case, do I need to pay LTCG for the profit (ie Rs.15L at 20% rate ie Rs.3L)? Please note that the amount would be re-invested in equity fund itself.

    Thanks in advance
    jith

    Reply
    1. Team BankBazaar

      Hi Jith,

      Thanks for writing to us. There is no long term capital gains tax on equities and Equity Mutual Funds.

      Cheers,
      Team BankBazaar

      Reply
  19. tejasya

    Hi… could u please clarify this.
    Cost of acquisition of asset was Rs 100.00
    After indexation the value Rs 200.00
    Sold for Rs 300.00
    Net Long term capital gain Rs 100.00
    Tax @ 20% Rs 20.00

    Please clarify to save tax, whether the assessee has to invest Rs 100.00 ( net gain) or Rs 20.00 ( taxable amount ) in Capital Gains accounts ?

    Reply
    1. Team BankBazaar

      Hi Tejasya,

      You need to invest an amount equal to the long-term capital gains that you have made and not the tax amount payable.

      Cheers,
      Team BankBazaar

      Reply
      1. Nageswara rao Uyyala

        Hai Sir,

        I have seen you are giving the replies with patient and clarifying the doubts and giving very valuable suggestions to all, Here my question is I am a Govt Employee and drawing annual salary of Rs.8.00 lacs, and taxable income is about Rs.5.50 lacs

        I have sold my residential plot for Rs.40.00 lacs, which was purchased 4 years back for Rs.5.00 lacs, Means i got Rs.35.00 laks profit , Now i have deposited Rs.35.00 lacs in Capital gain account in SBH, Now i am planning to invest in NHAI or REC bonds for three years, after 3 years , i will withdraw full amount and i want do the fixed deposit in Public sector bank for 10 years, full amount of Rs.3500 lacs.
        Here my openion is about above process, i need not pay any tax for total 40.00 lacs any where. am i correct.
        if you replied to my query, i am very much gratefull to you.

        Reply
        1. Team BankBazaar

          Hi Nageswara, According to the rules, you need to invest the entire capital gain realised within 6 months of the date of transfer in eligible bonds. This way your capital gains will be exempt from tax. However, the interest shall be taxable.

          Reply
  20. Nirmal Makhijani

    I have sold my shop, have 50 lacs and dont want to purchase any thing.

    What is the best way to save tax. (keeping the amount in bond or keeping the whole amount in fixed deposit).

    Reply
    1. Team BankBazaar

      Hi Nirmal,

      If you have made Capital Gains on the sale of your shop, you can save tax by choosing to invest in Capital Gains bonds or by putting the money into a Capital Gains account. You will not be able to save on Capital Gains tax by putting the amount into a Fixed Deposit.

      Cheers,
      Team BankBazaar

      Reply
    2. arvind

      My situation similar as above, now supose we put all proceeds in Cap Gain A/c then after how long this total amount becomes tax free or we have to pay LTCG eventually because that a/c can be operational for max 3 years pls advice thanks arvind

      Reply
      1. Team BankBazaar

        Hi Arvind,

        The proceeds from the sale of property which have been placed in a Capital Gains account do not become tax-free. You need to invest the proceeds in a residential property within the stipulated time. If you want a capital gains exemption, you can opt for Capital Gains Bonds. However, the interest earned on the bonds will be taxed.

        Cheers,
        Team BankBazaar.

        Reply
  21. Mahendra

    Hi, have 1. House in village and 2 flats in city. I want to sell one flat and going to book flat in under cconstruction. Shall i get aadvantage of section 54 to save LTCG.

    Reply
    1. Team BankBazaar

      Hi Mahendra,

      You can save on capital gains through Section 54 if you follow the rules stated.

      Cheers,
      Team BankBazaar

      Reply
  22. Ravi

    Dear Sir,

    My mother sold a property in 58 lacs and my father bought a property in bank auction in 68 lacs within 3 months .

    Should he pay the long term capital gains and TDS ?

    The auctioned property is in our possession but a case is going on in DRT regarding this . Will it be clever to pay the TDS if he needs to ? If yes then how much ? Thank You !

    Reply
    1. Team BankBazaar

      Hi Ravi,

      To save on capital gains tax, the owner who sold the property has to be the one who purchases another property. For specific advice regarding TDS, please contact your legal counsel.

      Cheers,
      Team BankBazaar

      Reply
  23. Gill

    Hello Sheetal

    I am an NRI residing in Dubai. I wish to sell my house in Mumbai (purchased in Nov 2009 for Rs 58 lacs). With the proceeds (approximately Rs 1.2 crores), i plan to buy a house in Dubai costing around 2.5 crores.

    Will i be liable for Capital Gains tax?

    What is the process for transferring the funds from Mumbai to Dubai and will it be taxed?

    Thanks
    Gill

    Reply
    1. Team BankBazaar

      Hi Gill,

      You are liable to pay Capital Gains tax on proceeds from the sale of your house in Mumbai. Also, you can repatriate up to USD 1 million in a financial year. Please contact your bank (where you hold an account in India) for further details regarding repatriation or transfer of funds to Dubai.

      Cheers,
      Team BankBazaar

      Reply
  24. P B Chinnappa

    Hi Sir,
    I am Chinnappa P B . Selling my house in my name of 18 year old ( expecting 2 Crs) & wants to invest in a good commercial property with in 2 years where the tenants will occupy for at least 5 to 10 years. Request your inputs on the following.
    1. Can I deposit the sale proceeds amount dividing 50000 each in mine , wife & 2 sons name of bank S B a/c to save OR reduce the I T on interest.
    2. Capital Gain bank A/c scheme 1988.
    Property in my name sold & can I deposit the sale proceeds amount in 4 name of a/c to save OR reduce the I T on interest.
    3. Do you suggest getting the property Registered jointly with my wife name before sale of property to save OR reduce the I T on interest.
    4. Finally I am 54 years & left the job. The income from property is the only means of my living. My 2 sons are studying in final year graduations.
    Suggest me if any other options best for me to invest where the value of money not depreciated over next 10 years & passed on to my sons later.
    I am obliged for your valuable inputs & suggestions Thank you & warm Regards
    Chinnappa P B

    Reply
    1. Team BankBazaar

      Hi Chinnappa,

      Thank you for the query. We suggest that you contact your legal counsel for help regarding this matter.

      Cheers,
      Team BankBazaar

      Reply
  25. Suman Banerjee

    Hi,
    Kindly advice if I can avail exemption of LTCG by investing both in Govt Bond & purchasing a residential property.
    Example :
    Purchase price of my existing house is Rs. 1 crore. I have sold the house for Rs. 3 crores. Post Indexing the Sale Consideration is Rs. 1 crore. So my LTCG is Rs. 1 crore.

    Can I invest Rs. 50 lakhs in Govt Bond and buy a property for Rs. 50 lakhs in the same financial year ?

    Regards, Suman Banerjee

    Reply
    1. Team BankBazaar

      Hi Suman,

      Presuming that the Capital Gain arising is on sale of a Residential House Property (not any other Capital Asset) and the Gain is a Long Term Capital Gain (House Property held for more than 3 years and sold), you may claim exemption under Section 54 (not u/s 54F) to the extent of Gain invested in another 1 house property in India. You may own only one house at the time of this investment in new House Property. If you are already the owner of 2 or more houses, then the new investment in House Property will not fetch any exemption

      Any Long Term Capital Gain that could not be invested or could not be invested fully in a new House Property may be invested in Section 54EC bonds (specified bonds like NHAI Bonds, REC Bonds) up to a maximum of Rs. 50 lakh in a year. This investment in bonds should be done within 6 months from the date of sale.

      Section 54F provides for exemption of Long Term Capital Gain on the transfer of any long-term Capital Asset other than House Property. For the purpose of claiming full exemption here, the quantum of investment is full sale consideration and not only the Capital Gain. If not, the exemption is given pro-rata to the amount of sale consideration invested.

      However, we request you to consult your tax adviser/counsel for more clarity on this issue.

      Cheers,
      Team BankBazaar

      Reply
  26. Sathish

    If three acres of Industrial Land (In India) is sold by sub dividing into 30 plots over 2/3 years. Can Total sale proceeds of 3 acres be reinvested in a single house. Also Tax Guideline says that reinvestment must be made within 2 years of completed unit or 3 years for under construction unit. My question is 2 or 3 years start from date of sale of first plot or from date of sale of Last plot.

    Reply
    1. Team BankBazaar

      Hi Sathish,

      As yours is a unique case, we suggest that you contact your legal counsel for help. They’ll be able to give you the right guidance.

      Cheers,
      Team BankBazaar

      Reply
  27. Dilip Warke

    If the capital gained is invested in capital gain bonds for 3 years the interest is not tax free. But what about the maturity amount? Is it taxable again or tax free.

    Reply
    1. Team BankBazaar

      Hi Dilip,

      Only the interest earned on Capital Gains Bonds is taxable. Also, there is no TDS on the maturity amount.

      Cheers, Team BankBazaar.

      Reply
  28. Manjari Jain

    I had purchased a property for 12 lacs in Jul 2009 and sold for Rs.22 lacs in Jul 2015. What is the amount that i should invest in Capital gain bonds to get exemption from Capital gains tax.

    regards
    Manjari

    Reply
  29. Abhishek j

    If one person sells his property and opens capital gain account within 6 month of the sell of tbe property.but after 31 st july.does it make any difference.
    My second point is the same person sells his flat and a plot then can he put aal combined capital gain into one account to buy a new housd

    Reply
    1. Team BankBazaar

      Hi Abhishek,

      If a person has sold his property and intends to put the proceeds into a capital gains account or invest in another residential property, this needs to be done before the last date for filing returns. However, if the person intends to invest the amount in tax-saving bonds, it will need to be done within 6 months, irrespective of the last date for filing returns.

      Cheers,
      Team BankBazaar

      Reply
  30. jksekar

    Hi Sir / Madam,
    I bought a land during FY 2008-09 for Rs 3.6 L now I want to sell for Rs 18.00 L as per present GLV.
    around 7 L there is a exemption as cost of Inflation index. Balance 11.00 L needs to pay tax.
    Now how to re-invest in land / property ?
    Or Should I invest in Capital gain bond / capital gain bank a/c scheme ? if so what is the procedure . How long… 3years or more than that….
    Pl explain….
    Thanks
    JKsekar

    Reply
    1. Team BankBazaar

      Hi Jksekar,

      You can get a tax exemption either by investing the capital gains amount in capital gains bonds or by buying a residential property. If you are unable to purchase the new property in the financial year in which you sell the old property, you need to hold the gains in a capital gains account. You can keep the proceeds in a capital gains account for up to 2 years (if you are buying another residential property) or up to 3 years (if you are constructing a new house). If you decide to invest in capital gains bonds, the amount will be locked-in for three years.

      Cheers,
      Team BankBazaar

      Reply
  31. V SAKUNTALA

    Dear Sir,
    In the mean time to consult the auditor to pay the capital gains tax and file the return, the amount is kept in Fixed Deposit. Later came to know that exemption is available if invested in NHAI/REC bonds. Whether the said Capital Gains amount can now be invested in the said bonds by withdrawing from the Fixed Deposit A/c?

    Reply
    1. Team BankBazaar

      Hi Sakuntala,

      You need to invest in capital gains bonds within six months of the sale of property. If you have not exceeded this 6-month period, you will be able to invest the amount in the bonds.

      Cheers,
      Team BankBazaar

      Reply
  32. mishra h.

    sir. I have three residential flats and one shop in my name. now i have sold my shop with one residential flat out of three flats. now i want to purchase another flat . can i get rebate in section 54 .

    Reply
    1. Team BankBazaar

      Hi Mishra,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you get legal counsel or consult your financial advisor to sort this out.

      Cheers,
      Team BankBazaar

      Reply
  33. saurabh

    Residential property X bought in 2006 and being sold in 2016 . Residential property Y booked in 2013 and going to be given possession in Dec 2016 . There is a home loan on property Y ( greater than expected LTCG )

    Query 1 : What is considered as date of purchase for second property – Date of booking / allotment or Date of possession or Date of Registration ?
    Query 2 : Can the LTCG from property X be expempt if it is used to pay off homeloan for property Y ( case above )
    Query 3 : Both properties X & Y are in joint names of husband and wife . Does it matter who is first owner name or second name when it comes to LTCG liability . Are both liable or only the first owner ?

    Reply
    1. Team BankBazaar

      Hi Saurabh,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you get legal counsel or consult your financial advisor to sort this out.

      Cheers,
      Team BankBazaar

      Reply
    2. Sood

      Suppose, my mother sold her flat X in September’16 , to which capital gains were 30L, and my dad & mom jointly bought another flat Y in August’16 worth the same amount, to which a loan amount of 15L remains, can she be exempted from taxation on LTCG? If not, how can they fully utilize capital gains to save most.
      Thank you 🙂

      Reply
      1. Team BankBazaar

        Hi Sood, In case of joint ownership, the capital gains exemption will be based on the proportion in which the property is held. We’d love to help you further but as we only provide general tips and advice on personal finance, we suggest that you contact your financial advisor for further clarifications.

        Reply
  34. B P JAIN

    I HAVE PURCHASED A RESIDENTIAL HOUSE AVAILING OF LONG TERM CAPITAL GAIN OF ANOTHER HOUSE IN MY NAME . NOW I WANT TO RECONSTUCT THE HOUSE BEFORE COMLETING 3 YEARS OF PURCHASE I DONT WANT TO TRANFER THE NEW HOUSE AS PER THE CONDITION OF I T ACT PL ADVICE WHEHTER THIS WILL ATTRACT ANY TAX. THANKING YOU VERY MUCH

    Reply
    1. Team BankBazaar

      Hi Jain,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult a chartered account for advice on this.

      Cheers,
      Team BankBazaar

      Reply
  35. Sulochana Tare

    Hi Dear

    I am NRI and sold X property on 26th April 2016. The procceds were credited to NRO act held jointly with my husband (second name). I intend to invest this month , the entire Y amount of LTCG in NHAI under section 54EC jointly with my husband (second name). My queries are –

    1. NHAI bonds are allotted at the end of the month so the date of the allotment will be 31st October 2016 which will be marginally more than 6 months . Can I claim the benefit under 54EC ?
    2. Can I hold the bonds in joint name with my husband and claim LTCG solely in my name ?
    3. If above is not possible or if in am late, can I open Capital Gains Account (after 8 months from the date of transfer of property when I will b in india again) from the sale proceeds kept in NRO Fixed Deposit ?

    Please advise urgently. Best regards

    Reply
    1. Team BankBazaar

      Dear Sulochana,

      You will need to invest in Capital Gains bonds within 6 months. If not, you can keep the gains in a Capital Gains account before you file your taxes for the year. For more advice regarding this, we suggest that you get in touch with a Chartered Accountant.

      Cheers,
      Team BankBazaar

      Reply
  36. T V KRISHNAMURTHY

    Dear sir
    I am a senior citizen 73 years old.
    i am living in a house constructed by me in 2003.
    I am a retired person with inadequate savings to sustain my expenditure.
    I will not be paying any tax now onwards since I do not have any salary income.
    I propose to sell my house, choose to take up a house on rent, and retain the proceeds as a deposit to generate monthly interest to meet my expenses.
    kindly advise as to how to calculate the cost of the house, gains accrued if i get a good price and what will be the capital gain implications if i have no plans to reinvest.

    Reply
    1. Team BankBazaar

      Hi Krishnamurthy,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you get legal counsel or consult a financial advisor for advice regarding this.

      Cheers,
      Team BankBazaar

      Reply
  37. Manoj

    Dear Sir

    My Friend wants to plan to sell a property purchased in 1990 . If the capital gain is more than 50 Lakhs

    1. Can the above amount can be reinvested in CAPITAL GAIN BONDS and for Buying House Both
    2. Since I had a planning to buy 3 Bed Room Flat. But the same is taking time. How can I plan for parking the excess money. And how much time I have to spend the time.
    5. I have the information that in the Budget the period is extended to 5 years. Is it true.
    6. What is the time period of Transfer of Money to Capital Gain Account.
    7. Since the Yield of capital gain account is very less, Can the said amount is used for some other business purpose and before the due date amount is transferred to Capital Gain account
    8. In case if the capital gain account money is not utilised within specified period, how is the Income Tax calculated, Do we have to pay the Interest or any penalty for not utlizing the funds.

    Sorry for the long list of questions. I want to be very clear before I use the funds as it is very hard earned money.

    Thanks and Regards

    Reply
    1. Team BankBazaar

      Hi Manoj,

      You can choose to invest either in capital gains bonds or put the money into a Capital Gains Account. However, the tax exemption available for the bonds has a limit of Rs. 50 lakh. You can invest the rest in a capital gains account. We would love to help you further, however, we only provide general advice and tips on personal finance. For guidance on specific queries, we suggest that you get legal counsel or consult your financial advisor.

      Cheers,
      Team BankBazaar

      Reply
  38. lalit kumar soni

    hi sheetal …..
    a little bit confused on LTCG
    for EXAMPLE my mother bought a house in 1997 for 2.5 lacs
    n in 2016 she sell this property for 19.5 lacs
    n the LTCG is 11 lacs
    now the questions are :-
    1…. she purchased a new residential house which is going to b completed in nxt 6 months …..
    is she able to first buy the new property n make the payment later (by selling the previous property) n gain the tax exemption ….???
    2… if she didnt invest the LTCG 11 lacs in purchase of a new property n invest the same amount in NHAI (or any capital gain bonds) for 3 yrs n after maturity …. the interest will b taxable or the whole 11 lacs is also taxable …??
    n if only interest is taxable ( the interest payable is yearly ) what will b the tax slab (if her tax slab falls in 10% )

    Reply
    1. Team BankBazaar

      Hi Lalit,

      In order to get a tax exemption on long-term capital gains, you need to purchase the new property either one year before or two years after the sale of your property. If you invest in capital gains bonds, the total amount invested will be exempt from tax. However, the interest on these bonds is taxable. The interest rate on NHAI bonds is currently at 6%, payable annually.

      Cheers,
      Team BankBazaar

      Reply
  39. lalit kumar soni

    other than selling n buying a property ….. what else items are eligible for LTCG (like investment in GOLD… SILVER etc)

    Reply
    1. Team BankBazaar

      Hi Lalit, All assets are subject to capital gains tax.

      Cheers,
      Team BankBazaar

      Reply
  40. lalit kumar soni

    my grandfather owned a proprety (didnt remember the purchase date nor the amount) …..he died in 1986 ….
    3 yrs back (in 2013) it was transferred in my father’s name (gift property) …
    my father died on 1/1/2016 ….
    now the property will b transfered in my name ….
    i want to sell this property in 50 lacs ( i have a buyer)
    The question is :-
    what will be LTCG
    n if i invest the ENTIRE AMOUNT in CAPITAL GAIN BONDS … is the TAX will b EXEMPTED

    Reply
    1. Team BankBazaar

      Hi Lalit,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult a chartered accountant to sort this out.

      Cheers,
      Team BankBazaar

      Reply
  41. nitin agrawal

    hi,
    just one small doubt. my father and mother are having multiple properties. so if they sell their properties and invest the entire amount in capital bonds then they dont have to pay any tax right ? please clarify. thank you.

    Reply
    1. Team BankBazaar

      Hi Nitin,

      It is true that you get a capital gains exemption if you invest in capital gains bonds. However, the maximum investment limit for these bonds is set at Rs. 50 lakh per financial year and the interest earned on the bonds is taxable.

      Cheers,
      Team BankBazaar

      Reply
  42. Abhishek

    My father sold his house in Mar 2016 and deposited the amount in capital gains account in a public sector bank.

    In Oct 2016, he purchased an under construction flat from landowner’s share. The flat is registered to his name. The construction of the flat will be complete in 2019.

    As per the Income Tax rules, one has to purchase a residential property within 2 years.

    In this case the registry is done within 2 years but the possession of flat will happen after 2 years time period.

    What is considered as date of purchase of new property to save capital gain tax date of possession or date of registry of flat ?

    Reply
    1. Team BankBazaar

      Hi Abhishek,

      The date of registration will be considered as date of purchase of property.

      Cheers,
      Team BankBazaar

      Reply
  43. Abhishek

    Hello TeamBankBazaar,

    I sold my house in April 2016. The money is currently deposited in capital gains account.
    I am planning to buy a flat in a gated society which is under construction.
    The builder will give me allotment letter of flat in Dec 2016.
    The possession will happen in Dec 2019.
    The registration of flat will happen a couple of months before completion so tentatively Aug 2019.
    Complete capital gain from previous flat will be invested by March 2018 i.e. with in 2 years of the sale of old property.

    As per Long term capital gain tax :
    1) a residential property has to be purchased with in 2 years. OR
    2) a house to be constructed with in 3 years.

    Which category purchase of under construction flat comes 2 years or 3 years ?
    What will be considered as purchase date in this case, date of allotment letter, registration or possession date ?
    Will I be exempted of capital gain tax ?

    Regards,
    Abhishek

    Reply
    1. Team BankBazaar

      Hi Abhishek,

      An apartment will be considered to be a residential property and the 2 years time limit will apply. As far as we know, in the case of under contsruction flats, the date of the sale agreement is considered to be the date of purchase. However, note that when you sell the propety, the date of allotment is considered to be the date of purchase. It would be best to check with your chartered accountant to get more clarity on this. If you follow the capital gains rules, you will get the capital gains exemption.

      Cheers,
      Team BankBazaar

      Reply
  44. subho

    hi,

    My dad sold a property(land) 2.5 years back and has deposited the amount(27 lakhs) in a capital gain account to be invested in another property later. In the mean time i have also sold my flat at 20 lakhs this year which is deposited in my normal salary account.
    We have finalized a property worth 47 lakhs and have decided to invest the proceeds from both sale in the new property jointly. now my questions are
    1) Can both dad and I can claim exemption of respective capital gains tax by investing in the same property?

    2)I intend to take home loan of about 10 lakhs to be on a safer side as bank does deep verification of the property before giving loan. I intend to repay it back within 2 months with the proceed of the sale of my flat. so i am investing 10 lakhs directly to purchase the flat from my sale proceed and 10 lakhs to pay the home loan i intend to take on the same property. so can i claim capital gain tax exemption for the entire amount on 20 lakhs by doing that? or do i have to pay tax ?

    Reply
    1. Team BankBazaar

      Hi Subho, Both your father and you can claim capital gains exemption for the same property if you are co-owners. However, in case of joint ownership, each joint owner will be regarded as a beneficial owner of the property in the proportion of the cost of the property borne by each for the total cost of the property.
      To understand the taxable amount of the sale proceeds, you need to first calculate your total capital gains. The tax amount will differ based on whether it is short term capital gains or long term capital gains. The total sale proceeds will not be your capital gains.

      Cheers,
      Team BankBazaar

      Reply
  45. Shinto Thomas

    Hello TeamBankBazaar,
    I am having two flats on my name and one of them have loan.

    I am planning to sell the flat-A which is not on loan and use the profit to prepay the loan of the second flat-B.
    I wanted to understand will there be any capital gain tax that is required to be paid by me?

    Flat-A (without loan) purchased on July 2014.
    Flat-B on loan purchased on November 2014.

    Thanks,
    Shinto Thomas

    Reply
    1. Team BankBazaar

      Hi Shinto, Capital gains will apply when you sell any property, irrespective of whether you boght it throgh loan or yor own funds. If the property is sold within 3 years of prchase (as in yor case), Short Term Capital Gains (STCG) will apply. There are no exemptions for STCG.

      Reply
      1. shinto

        Thanks for your reply.
        I understand that capital gain will be there but if I use this capital gain amount to close the loan of other property – purchased Nov2014 then there is no need to pay tax right?

        Reply
        1. Team BankBazaar

          Hi Shinto, You can claim tax exemption under section 54/54F if the sale proceeds are utilised within a year before or 2 years after the date of transfer.

          Reply
  46. sameer

    hello Team bank bazaar,

    I sold one commercial property and paid the entire proceed towards loan settlement. there is long term capital gain , i need to buy NHAI bonds. i am left with no money. can i take loan to buy nhai bonds, please let me know

    Reply
    1. Team BankBazaar

      Hi Sameer, It is not a great idea to take loans to save on capital gains. Ideally, you should have invested the capital gains instead of using the money to repay your loan. We suggest that you get in touch with a Chartered Accountant to find the best solution to this.

      Reply
  47. Suyash

    Can capital gains be invested part in house property and part in bonds.
    Like if the CG is 100 of which 70 is invested in residential house and 30 in CG bonds.
    In this case will whole CG will be exempted ?

    Reply
    1. Team BankBazaar

      Hi Suyash, It is possible to invest in such a manner. However, it would be best to get help from a financial planner to know the right way to invest the capital gains.

      Reply
  48. PK

    Hi,

    I have purchased a residential plot in 2012 and a flat in 2013. Now I want to sell my residential plot. Can I reinvest the amount into another plot or agriculture land? Or do I have to still pay Long Term Capital Gains Tax as I already own another flat?

    Please advice.

    Thanks,
    PK

    Reply
    1. Team BankBazaar

      Hi PK, If you incurred capital gains on selling your residential plot, you will need to pay capital gains tax on the same. In order to get capital gains exemption you could consider investing in a residential house. Please read this blog post for more.

      Reply
  49. Govind Kedia

    Hello Sheetal Madam,
    I need some information.
    1) I am owing only residential house at present. I am planning to sell the said house and purchase a new house. How can i save tax of LTCG.
    Can i purchase Capital Bonds in addition to purchase of new house.
    2) I am also owing a commercial shop. I am selling the said shop and purchasing a residential house. How can I save the LTCG Tax
    Can i purchase Capital Bonds in addition to purchase of new house.

    Reply
  50. Manoj

    Hi Team,

    Please tell me whether proceed from selling ancestral property can be used to buy next property jointly with someone to avoid Long term Capital gains tax, OR new property has to be solely in name of person selling ancestral property.

    Regards
    Manoj

    Reply
    1. Team BankBazaar

      HI Manoj, In case of joint ownership, each joint owner will be regarded as a beneficial owner of the property in the proportion of the cost of the property borne by each for the total cost of the property. So, capital gains might become proportional.For more clarity on this, please get in touch with your legal counsel.

      Reply
  51. merlinsa

    If you’ve been on the fence about long-term care insurance, here are six long-term care insurance tax breaks that may affect your decision. For individuals, the Internal Revenue Service considers tax-qualified long-term care premiums a medical expense. To what degree that will save you money on your taxes largely depends on your age and how you make a living.

    Reply
  52. Bharat

    Dear Bank bazaar Team,

    I and my wife bought a house in 1997 , our only property, to live in it, sold it in 2016.
    The difference between the sale price and inflation indexed price of the house was say
    14 lacs. This amount of 14 lacs I suppose is the capital gain.
    In less than two years we bought a smaller house for 42 lacs. Going by the above discussions
    it appears that I have invested the entire capital gain and much more on top for another
    house , Do I have to pay any Capital gains Tax? This is the only property we have and it is our residentialproperty.

    I am getting conflicting advice and I will highly value your opinion.

    Regards,

    BA

    Reply
    1. Team BankBazaar

      Hi Bharat, If you have invested the entire sale proceeds of your previous house in the purchase of your new house, the Long-term Capital Gains (LTCG) tax, which was applicable in your case, would be exempted under Section 54/54F. However, there are certain conditions attached to it, which in your case, are:

      1) There’s a lock-in period of three years for your new property. If you sell your new house before three years, the tax exemption will be revoked and the capital gain will become taxable.

      2) Also, the LTCG tax maximum exemption cannot exceed the amount of LTCG used for buying a new house. The balance amount of LTCG (after investing in new property), if any, is taxable at 20%.

      If you need more help on this, you can seek help from a financial expert. Cheers, Team BankBazaar

      Reply
  53. Sidharth

    Hi!
    I bought a flat in 2009-10 for 50 lakhs. And I am now going to sell this flat for 90 lakhs.
    Meanwhile, six months back my father and I purchased a flat worth 1 crore jointly.

    I understand that after applying CII, the value of the original flat today stands at 89 lakhs. And when I sell this flat for 90 lakhs today, my LTCG is 1 lakh.

    Please help with the following questions:
    1- To save myself from LTCG tax, do I need to invest 1 lakh in the new property OR (90 lakhs – 50 lakhs) 40 lakhs in the new property?
    2- The new flat is a joint ownership, while the original flat was fully owned by me. Can I still enjoy the exemption?

    Thank you.

    Reply
    1. Sidharth

      Just an addition to the above: For the original flat which I own, I have not taken the possession yet. The project was delayed and the possession was just announced a year back. And I have been avoiding possession because I decided to sell this one and buy the new one.

      Thank you for helping out.

      Reply
      1. Team BankBazaar

        Hi Sidharth, While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you get legal counsel or consult your financial advisor to sort this out. Cheers, Team BankBazaar

        Reply
  54. sanjai

    IHi Sir,

    I am staying in my residential house since 2005. I purchased a site in 1997 for 2 laks and now i want sell this for nearly 35 laks for repaying a housing loan for a flat which is purchased (registered) in march 2016 for 55 lakhs.

    Pls tell me will i get tax exemption for full LTCG.

    SKM

    Reply
    1. Team BankBazaar

      Hi Sanjai, There are several provisions available to reduce the tax burden on LTCG. While the tax rate on LTCG is set at 20%, there are several conditions that apply while saving LTCG tax. In a nutshell, here are the key points to consider:

      – Section 54/54F states that you can claim LTCG tax benefit if the net sale proceeds are invested in purchase or construction of one residential property, (subject to conditions – Please read the blog for more information about this
      – If you deposit funds under the Capital Gain Account Scheme (CGAS). However, to avail of a tax benefit, the capital gain should be re-invested in a residential property before filing the income tax return for that year.
      – If you invest the proceeds in notified bonds by the National Highways Authority Of India (NHAI), or Rural Electric Corporation Ltd (REC) for a minimum of 3 years.

      Lastly, you have to invest the amount in the capital gain bonds within 6 months from the date of sale (of property) or before the due date of filing income tax return (usually 31st July), whichever is earlier.

      Comprehensive details have been mentioned in the above blog post. Do refer to it.

      We hope we’ve answered your query. Feel free to reach out to us if you need more information.

      Cheers,
      Team BankBazaar

      Reply
      1. Sanjai

        Thanks Sir.
        Can I park my capital gain amount directly into home loan account of flat which I purchased last year March 2016.
        Pls reply

        Reply
  55. M Nissar

    I bought a small go down space in basement of complex
    For 2 lacs in 2009 and now selling for 8 lacs on 2017

    The capital gains tax after indexation can be round 60000 rs approx how to save this gains tax which are best avenues I don’t intend to buy any other property or office.
    How much time frame I need to remain invested in bonds are cumulate bonds available of rec etc

    How much time available for me to invest in bonds
    What are the tenure of these bonds and r they tax free.

    Pls guide the best option to save on capital gains tax

    Reply
    1. Team BankBazaar

      Hi Nissar, If you wish to claim exemption from Long Term Capital Gains (LTCG) tax, you have to invest your capital gains within six months from the date of sale of your property or before the due date of filing income tax return (usually 31st July) in notified capital bonds issued by the National Highways Authority of India (NHAI) or Rural Electric Corp. (REC) Ltd. The minimum preiod of investment in capital bonds is 3 years and it is capped at Rs. 50 lakh (maximum) per financial year. The interest rate on these bonds is at 6% and the interest income gained from these bonds is taxable. Cheers, Team BankBazaar

      Reply
  56. mukesh

    i have a LTCG of 50 lac FY 2016-17..I am having one under construction residential property that is the only residential property I have.. I am yet to pay about 10 lac for the ongoing construction for which I think that definitely i can claim for exemption under 54F . if outstanding home loan on this under construction property can also be paid with this. The land was purchased in 2014-15, and the construction was started in 2016-17 only.

    Reply
    1. Team BankBazaar

      Hi Mukesh, While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult your financial advisor for help with the calculation. Cheers, Team BankBazaar

      Reply
  57. Vivek Ranjan Hazari

    Can capital gains be invested part in house property and part in bonds.
    Like if the CG is 44 of which 24 is invested in residential house and 20 in CG bonds.
    In this case will whole CG will be exempted ?

    If no then what will be the tax amount.

    Reply
    1. Team BankBazaar

      Hi Vivek,
      It is possible to invest partly in capital gains bonds and partly in residential property. However, you need to contact your financial advisor to understand the proportion in which it can be done.
      Cheers,
      Team BankBazaar

      Reply
  58. DR C K WAHAL

    Team Bazaar,

    • I have the following query related to capital gains.
    • I own a small Free Hold plot adjacent to another almost same sized Free Hold plot of my brother individually in respective names that we acquired from about a century old ancestral property after our father divided the property way back in 1973.
    • We both entered in a joint collaboration project with a builder in June 2013 and he has constructed a residential apartment complex of 4-stories on it. As per the contract few flats are in the builder’s share and rest are in our share; each of us myself and my brother having 50% share in it.
    • These apartments are of normal size and I would like to buy a bigger apartment after selling these in another locality/city.
    • I would like to know that if I sell my share of apartments and buy an apartment elsewhere by investing the money received from 2-3 apartments what would be the procedure to calculate capital gains.
    • Whether it is permissible that I pool the funds received by selling more than one apartment and buy a bigger apartment then under that condition whether I can take the rebate of Capital Gains on the entire amount received if the total value of this bigger apartment is equal or exceed the amount received by selling more number of apartments? Or I can get rebate on the sale proceeds of only one apartment?
    • How the capital gains would be calculated in such case? Whether the selling amount received would be considered on the basis of the old ancestral property (supposing I had sold the plot itself) or it would be considered as a new investment?
    • I would appreciate if you rightly guide me in this matter so that I can accordingly plan and take full advantage of the capital gains rebate as permissible under Income Tax Rules under such circumstances.

    DR. C. K. WAHAL

    Reply
    1. Team BankBazaar

      Hi DR. C. K. WAHAL,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult your financial advisor for help with the calculation.

      Cheers,
      Team BankBazaar

      Reply
  59. shridhar

    shridhar

    sir i have bought 2 properties in 2012 , now am going to sell 1 property, and with that money i am going to buy another property. so can i claim LTCG TAX Exemption?

    Reply
    1. Team BankBazaar

      Hi Sridhar,

      Yes. It is possible to claim capital gains exemption. Please read this blog post for more.

      Cheers,
      Team BankBazaar

      Reply
  60. M. dharan

    Hi, I am planning to sell my land for 18 L in Mar 2017 which was bought by me during 2013 for 8 L. I already own a house. Can in use the sales proceeds to buy another house within 6 months or do I need to invest the gain in bonds to avoid LTCG tax. pls. advice.

    Reply
    1. Team BankBazaar

      Hi M Dharan,
      In order to get capital gains exemption, you need to invest only the amount of capital gains and not the sale proceeds. More information is available in this post.

      Reply
  61. Aruna Burte

    The sale proceeds of my property is Rs.1.10 cr. Can I invest in government bonds for long term capital gain tax saving Rs.50 L before 31st March 2017 and remaining Rs.60 L on 1st April 2017?

    Reply
    1. Team BankBazaar

      Hi Aruna Burte,
      You need to invest in the year in which you incur those capital gains.

      Cheers,
      Team BankBazaar

      Reply
  62. Sameer

    Hi,

    I sold a flat “A” in Dec’ 2012 after 8 years of buying it. I also booked a new flat “B” in Dec’ 2010 and availed bank loan for the same. In March’ 2013 I repaid the entire loan amount (foreclosure) to bank for flat “B” from the funds of flat “A”. The flat “B” was supposed to be ready for possession in June’ 2012. However, the actual possession of flat “B” was given to me in March’ 2013.

    Please help me to understand if I can save on LTCG tax.

    Reply
    1. Team BankBazaar

      Hi Sameer,
      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help but due to the specific nature of your question, we suggest that you consult your financial advisor for more information about this.

      Cheers,
      Team BankBazaar

      Reply
  63. Pingback: How To Pay Capital Gains Tax Online India | Information

  64. AB

    My Grandfather has bought a Land in Delhi(80 sq yard) from DDA in April 1980 for Rs 1L.
    Over the period of 35+ years, we have constructed/renovated the house, which costs
    approx 40-50 Lakhs.

    Recently in Feb 2017 we have sold this property for Rs 1Cr.
    My Grandfather has two sons, we all are thinking to buy two house in Noida , each for one brother.
    Now my question are:
    1. Cost Inflation Index of 1981 & 2017 is 100 & 1125 respectively,how to add the construction/renovation cost
    (do we need to show the proofs of that) while calculating LTCG.
    2. As we get the money in Grandfather account, so to avoid the tax on LTCG, should the propery be bought in grandafther name only,
    or it can be in his son/grandson name ?
    3. If we buy the under constructed property in which possession commited by builder is after 2years, will we get the tax benifits of LTCG.
    4. Can I & spouse take the home loan tax benifts while buying the house along with grandafther LTCG ?

    Reply
    1. Team BankBazaar

      Hi AB,
      The property that you purchase should be the name of the person who incurred capital gains. If you are buying in joint names, the proportion of capital gain exemption will be in the proportion in which the property is held. If the Home Loan is in your name, you can claim tax benefits.

      Cheers,
      Team BankBazaar

      Reply
  65. Roma Trikha

    I sold a 40 year old inherited property in june 2015,kept the money in capital gain tax deposit with govt bank for 3 years .

    What is the last date of buying the new property…ist june 2017 or 2018 ??

    This is going to be my first home

    Reply
    1. Team BankBazaar

      Hi Roma Trikha,

      The gains have to be used to purchase another house either a year before or within two years from date of transfer of such gains. If they have to be used for construction of a house, this must be done within three years of the date of transfer.

      Cheers,
      Team BankBazaar

      Reply
  66. Gaurav Mahajan

    Hi, We have deposit amount received from LTCG in Capital gain account on 1.5.2015 .
    We are not able purchase new home till date 28.3.2017 .
    So on 1.5.2017 tax will be deducted (20%) from our invested amount ? kindly advice
    Or still we can save tax ,need your advice
    How to differentiate House and under constructed house . Can we purchase a constructed house and then further extend its construction , this will give us 3 years time ??
    Need your advice

    Reply
    1. Team BankBazaar

      Hi Gaurav Mahajan,

      You need to purchase a property within 2 years or build a house within 3 years. There will be no TDS unless you decide to withdraw from the capital gains account. Note that the interest paid on your capital gains deposit is subject to tax. Please read this post for more information.
      Cheers,
      Team BankBazaar

      Reply
  67. ashish upadhyaya

    Hi, I have sold my flat and got proceeds in april’17 and amy’17. This flat was bought by me in the year 2004. I have also booked under construction flat in 2010 and expect possession this year. I took loan for this under construction flat in 2012 and have been paying EMI. If I pay entire loan amount from my sale proceeds , can I save LTCG tax?

    Reply
    1. Team BankBazaar

      Hi ashish upadhyaya,

      It is not possible to get capital gains exemption by paying off your loan. You need to purchase a residential property either a year before or 2 years after you incur the capital gains. For more information, please read this post.

      Cheers,
      Team BankBazaar

      Reply
  68. Jai

    Details of Residential property

    Date of Purchase : 1990

    Purchase Price : 7,25,000

    Expected sales price (2017) : 2 cr.

    As I understand, my indexed cost of acquisition would come to 45 lacs approx. Hence, LTCG should be about 1.5 cr . Now if I invest, 1.10 crores in a new (ready to move) property and balance 40 lacs in 3 year lock-in Tax saving bonds, I guess LTCG issue will be sorted.

    My query is what would be the Tax treatment of the balance 50 lacs from the sales proceeds. I am sure the government will never let this amount go scot-free and entirely in my hands. So kindly advise me about this issue & how I can minimise my Tax liability for this amount.

    Thanks & Regards.
    Jai.

    Reply
    1. Team BankBazaar

      Hi Jai,

      The tax will be applicable only your Long Term Capital Gains (LTCG) and not on the sale price.

      Cheers,
      Team BankBazaar

      Reply
  69. Jai

    Kindly assist me with an approximate FMV for my office. I hereby provide you some important details.

    Tenants Association formed in 2005.
    Property Purchased, Agreement signed, Taxes paid & documents registered by Tenants Association in June 2010. Proposed Co-op society formed.
    Stamp Duty / Registration of Co-op society done in March 2015.

    My Office space area is 105 sq ft (carpet area). Located on 2nd floor, building 50+ years old and without lift. No parking facility.
    As per my online research, my office comes under Mandvi area CTS 37. Hence, minimum agreement value for my office comes to approx. 22 lacs but I have been advised that since the building is 50+ years old & without lift, the reckoner value will reduce drastically, thus enabling me a substantial reduction in my Agreement value.

    Kindly advise me for the same and assist me with the FMV soon.

    Thanks & Regards.

    Reply
    1. Team BankBazaar

      Hi Jai,

      While we do provide general tips and advice on personal finance, we will not be able to provide guidance on specific queries. We would love to help, but due to the specific nature of your request, we suggest that you consult your financial advisor to help you.

      Cheers,
      Team BankBazaar

      Reply
  70. satish

    Hello,

    i purchased residential plot for Rs 3 Lakh in 2003 and plan to sell for Rs 55 Lakh in June 2017.
    case1 – what will be long term gain and how much tax i have to pay.
    case2 – If i re-invest only Rs 20 Lakh in residential property this year , what will be my Tax liability ?
    case3 – If i re-invest only Rs 20 Lakh in govt bonds like NHAI/REC this year, what will be my Tax liability ?

    Thanks,

    Satish

    Reply
    1. Team BankBazaar

      Hi satish,
      In order to calculate your long term capital gains, you need to make the use of the indexation table. Please read this blog post for more information. You will have to invest the entire capital gains you incur in either a residential property or notified bonds or both. The amount that is not invested will be subject to tax.

      Cheers,
      Team BankBazaar

      Reply
  71. Joydeep

    I have sold my house to a developer in September 2016 for 55 lakhs of which I have received 26 lakhs in 2 installments in the previous financial year and invested 10 lakhs in NHAI bonds. i will receive the rest amount in this year. what will be my capital gains in previous financial year ? will I be able to invest in bonds when i receive the rest amount?

    Reply
    1. Team BankBazaar

      Hi Joydeep,

      We would love to help you but since your question is specific in mature, we suggest that you take the help of a chartered accountant.

      Cheers,
      Team BankBazaar

      Reply
  72. Sridhar Murthy

    I am an NRI and a US. Citizen. My parents have settled their family home in my name. However, I get the rights to the property only after passing of both my parents. Currently my dad has passed while my mom is alive. She wants to sell the property. We will likely get 52 lakes while our cost was Rs. 10 Lakhs. So we are likely to face a huge capital gains tax. My questions are:
    1. Will my mother continue to be the only tax assesse and hence liable for taxes in India or would I also be liable as an assesse.
    2. We do not want to buy an other residential property to save Capital gains taxes. What other investment choices we have to save capital gains tax
    3. As an NRI, what are my rights and obligations with respect to the sale of the property now and the inheritance of that amount in the future.

    I really appreciate your help in answering the above Questions.

    Reply
    1. Team BankBazaar

      Hi Sridhar Murthy,

      Since the property is in your mother’s name and not your name, your mother will be liable to pay capital gains tax. Your mother can consider investing in capital gains bonds if she does not wish to buy residential property. Since you inherit neither the property nor the money from your mother, there will be no tax implications for you. If you inherit money from your mother in future, there might be limits to repatriation to the US.

      Cheers,
      Team BankBazaar

      Reply
  73. SURESH

    My mother sold the agriculture land on AUG 2016 which will come under urban area.
    Amount is spitted in 4 shares.each share approx 40 Lakhs.
    One of my shares I have put in fixed deposited on same Aug 2016.I want to save my tax.
    In this current situation, what i have to do? Please advise.

    Reply
    1. Team BankBazaar

      Hi SURESH, Capital gains taxation on agricultural land in an urban area will be the same as any other capital asset. Please read this blog post to know more about how to calculate capital gains tax and how to save taxes – How To Save Tax On Long-Term Capital Gains.

      Reply
  74. ashok

    sir i purchased two small size plots for 5 lakhs each in 2006 now wish to sell them for 35 lakh each …….. and with this money i wish to construct a house on a plot purchased by my father ( this 70 lakhs and some savings of my own) ….do i have to pay any Capital gain tax for sale of plots .In addition I have one flat in my name.

    Reply
    1. Team BankBazaar

      Hi Ashok, Capital gains tax will be applicable when you sell a plot or land.

      Reply
      1. SPatel

        Dear Sir /Madam,
        Thanks for your valuable article on how to save capital gain tax on sale of land.
        I purchased a piece of vacant land in urban area in 2005 through registered sale deed. The registration value of the land was Rs 2 lakhs.
        I requested the authorized valuer of IT Department to make present valuation of the land. He has reported that the valuation of the land is Rs 40 lakhs as on March 2017 due to its nearness to State Highway and construction of a number of houses near the said plot.
        If the said land is sold now for Rs 40 lakhs, kindly enlighten if the value of land will be taken as Rs 2 lakhs and indexed or it will be taken as Rs 40 lakhs for calculating the long term capital gain tax. If possible kindly quote the relevant rule/ section of ITAct/Rules, if any, according to which valuation made by the registered valuer of IT Department is acceptable / not acceptable to IT Department.
        Yours Faithfully,
        S Patel

        Reply
        1. Team BankBazaar

          Hi SPatel, Only the price at which you purchased the property will be used to calculate the indexed cost of acquisition. This is as per Section 54, 54EC and 54F.

          Reply
  75. vinay

    I have sold a (Bought in 2012) residential House in September 2016 (Sale Deed Registered) and Now i m planning to buy a residential house after 11 months, So now will i get exemption from Long Term capital Gain or not

    Reply
    1. Team BankBazaar

      Hi Vinay, You need to purchase a residential house within 2 years from the date of transfer of the house that was sold, to be eligible for long term capital gains exemption. From the information that you have provided, you will be eligible for the exemption. However, we suggest that you consult your legal counsel just to be sure.

      Reply
  76. iqbal

    Dear sir,
    i would appreciate yr advice how to save long term capital gains tax on my commercial property bought in 2006. i am retired NRI still out of India and already having one residential flat in India given on rental basis & another flat given to my daughter -both are on my name purchased from my NRI funds. At present i am not paying any income tax in India since it is within the limit of 2.5 lacs per annum.
    on selling my existing commercial property, is it essential to buy residential property out of sales proceeds or i can buy another commercial property within 2 years and avail capital gains tax exemption?
    is it necessary that i should use this new residential property for myself or give it on rent without losing capital gains tax benefits under section 54 & 54f ?

    iqbal

    Reply
    1. Team BankBazaar

      Hi iqbal,

      Capital gains tax exemption is available only in case of residential property purchase. It doesn’t matter how you use the property after you purchase it. It will not affect your capital gains exemption.

      Cheers,
      Team BankBazaar

      Reply
  77. T.K.Chattopadhyay

    Dear Sir /Madame,
    I am going to sell my ancestral property alongwith others within few months time and definitely will have Long Term Capital Gain of nearly 5 lakh (my share) . To get exemption of LTCG Tax can I invest the entire sum of LTCG jointly with my son for purchase of one new/second hand house . I donot own any house in my name .

    With regards

    T.K.Chattopadhyay

    Reply
    1. Team BankBazaar

      Hi T.K.Chattopadhyay,

      You can be the co-owner of the property that you purchase, but you can claim tax exemption only in proportion to your share of the property. If that share doesn’t cover all your capital gains, then you might have to pay capital gains tax.

      Cheers,
      Team BankBazaar

      Reply
  78. Ajit Mane

    My father Purchased a plot in 1994 for Rs.90,000, I received it through Gift Deed in 2012. I took a Home Loan of Rs.8 lac for construction of house on that plot in 2012. Construction cost was around 15 lac. I took Top-up loan of Rs.4 lac on this property in 2015.
    I am selling the house now for Rs.70 lac. I will repay my outstanding loan with sell proceeds. My queries are,

    Will the Loan Amount which I am going to repay from sell proceeds be deducted while calculating LTGC?
    What would be the cost of purchase in this case ?
    How much would be long term capital gain tax on selling this property?

    Reply
    1. Team BankBazaar

      Hi Ajit Mane,

      The loan amount will not be deducted for calculating long-term capital gains. The cost of purchase will include the cost of the plot, cost of construction and cost of improvement, if any. For absolute accuracy, we suggest that you contact your legal counsel.

      Cheers,
      Team BankBazaar

      Reply
  79. T.K.Chattopadhyay

    Dear Sir / Madame,

    It is not clear to me whether LTCG Tax exemption is applicable if I invest the entire sum of LTCG for purchase of secondhand /old house .

    Thanking you,

    Reply
    1. Team BankBazaar

      Hi T.K.Chattopadhyay, As far as we know, the LTCG exemption is available for the purchase of any residential property. You could consult with your legal counsel just to be sure. Cheers, Team BankBazaar

      Reply
    2. Team BankBazaar

      Hi T.K.Chattopadhyay, As far as we know, the LTCG exemption is available for the purchase of any residential property. You could consult with your legal counsel just to be sure. Cheers, Team BankBazaar

      Reply
  80. Francisca Lobo

    My mother just sold some property for 12 lakhs. She bought it in 1998. How much will she have to put into REC bonds to avoid paying capital gains tax? TIA.

    Reply
    1. Team BankBazaar

      Hi Francisca Lobo,

      The amount that you need to invest will be equal to the capital gains made on the sale.

      Cheers,
      Team BankBazaar

      Reply
  81. Hima Ganga

    Hi,

    My mom got property (residential sites) about a year ago after my Dad’s death . If she sell the property , is it consider as a long term capital gain or short term? Can we apply any indexation for this property? If the current registration value is 7000 per sq yard, how do calculate income for one sq yard?

    Thanks and Regards,
    Hima

    Reply
    1. Team BankBazaar

      Hi Hima Ganga,

      As far as we know, indexation might be applicable for an inherited property if long-term capital gains are incurred. This is because the cost of acquisition is taken as the cost at which the previous owner purchased the property. For more clarity on this matter, we suggest that you contact your legal counsel.

      Cheers,
      Team BankBazaar

      Reply
  82. Sachin

    Hi,
    Thanks for this useful article and much appreciated your consultations above.
    I own two apartments, purchased in 2011 & 2014 receptively. I’m selling one of them which was bought in 2011. Could you please advise how can I get exempted from LTCG Tax after selling first apartment?
    I can invest the gained amount in new property if required.

    Thanks!

    Reply
    1. Team BankBazaar

      Hi Sachin,

      You could get capital gains tax exemption by investing in another residential property or by buying capital gains bonds.

      Cheers,
      Team BankBazaar

      Reply
      1. Sachin

        Thanks for the clarification. wouldn’t condition (iii) mentioned in the article be applicable here, if you can elaborate please?
        ——
        Condition (iii): The investor should not own more than one house (other than the new house) on the date of sale or purchase. Or, should not construct any residential house (other than the new house) within a period of three years, after the sale date.
        ——-

        Thanks!

        Reply
        1. Team BankBazaar

          Hi Sachin,

          Yes, this condition will apply.

          Cheers,
          Team BankBazaar

          Reply
  83. Sanjay Jaiswal

    Hi,

    I have bought flat in 2012 and selling it now with the profit of 10 lakhs. Please help me in how can I save my money w.r.t tax. Is it possible, if I can build my Native place house which is on my Father name?

    Also, I had borrowed some money from interest from relatives, it is possible if I can pay them and can I get tax exemption on same.

    Reply
    1. Team BankBazaar

      Hi Sanjay Jaiswal,

      Please check this post for information on how to save on capital gain taxes. You can build a house on a plot that is in your father’s name. If you are able to prove that you borrowed from your relatives and are paying interest, you can claim the interest paid as tax deduction.

      Cheers,
      Team BankBazaar

      Reply
  84. DILIP TATAKE

    Team bankbazaar,
    I am holding a flat in Pune with my younger brother who is now american citizen. We had purchased the flat from developer of our plot which was owned by our father and willed to all brothers. Since the price of the flat was more than compensation to be received from the developer by my brother, I contributed part of my amount and my share in the flat is 36.143%. I had requested my brother to take over my share by paying me amount as per market rate or slightly less. He is accordingly going to sell his equity holding in Indian shares and pay me. I propose to invest the amount in REC ? NHAI bonds to save on capital gains tax.
    1.My brother will have LTCG on sale of shares also. Since he will have property in his name fully, whether he will be exempted from LTCG on sale of shares.?
    Dilip Tatake

    Reply
    1. Team BankBazaar

      Hi DILIP TATAKE,

      As far as we know, long-term capital gains from sale of share is exempt from tax. This is not connected to other long-term capital gains.

      Cheers,
      Team BankBazaar

      Reply
      1. DILIP TATAKE

        Dear Team,
        Thank you for your reply. However, on one other site, I read, that for those who are no longer Indian Cirizens, the exemption does not apply nor they get benefit of Indexing. Flat 15% tax is applicable to them. Is it so?
        regards,
        Dilip Tatake

        Reply
        1. Team BankBazaar

          Hi DILIP TATAKE,

          Short-term capital gains on sale of property are subject to 15% while long-term capital gains are exempt if one invests in notified bonds or residential property.

          Cheers,
          Team BankBazaar

          Reply
  85. Mahe

    Hello,
    Request your opinion on following wherein I wish to sale my flat . Currently I have two options . Request to check the calculations under OPTION-A and suggest if is it advisable to invest in Bonds as an Option-B .
    OPTION-A ( PAYING LTCG TAX )
    COST OF ACQUISITION OF FLAT : 6 LAKH IN YEAR 1997
    SELLING PRICE OF FLAT ; 45 LAKH IN YEAR 2017
    INDEXATION COST : = YEAR 2017 IS 1125 & YEAR 1997 IS 331
    INDEXATION COST : = 1125 / 331 = 3.40
    COST OF ACQUISITION AFTER INDEXATION : = 6 LAKH * 3.40 = 20.40 LAKH
    LONG TERM CAPITAL GAINS = 45 LAKH – 20.40 LAKH = 24.60 LAKH
    LONG TERM CAPITAL TAX @ 20 % IS = 24.60 LAKH * 20 % = 4.92 LAKH
    LONG TERM CAPTAL TAX WITHOUT INDEXATION IS = 45 LAKH – 6 LAKH = 39 LAKH * 10 % = 3.90 LAKH
    OPTION-B ( INVESTING LTCG IN 54EC BONDS )
    Is it advisable to invest the proceeds of Long term captital gains of 24.60 LAKH in 54EC Bonds rather than paying upfront Tax of LTCG .

    Pls. advise

    Reply
    1. Team BankBazaar

      Hi Mahe,

      Investing in capital gains bonds helps you get tax exemption for your capital gains. Please read this post to understand more about the bonds. It is up to you to decide whether you want to pay those taxes or look at investments which will give you tax exemption.

      Cheers,
      Team BankBazaar

      Reply
      1. Mahe

        Thanks for your email . Could you please check if the calculation of LTCG is correct for both with Indexation & without Indexation .

        Thanks .

        Reply
        1. Team BankBazaar

          Hi Mahe,

          It seems to be accurate from the information you have provided. However, we suggest that you check with a financial advisor to ensure that the calculations are right.

          Cheers,
          Team BankBazaar

          Reply
  86. s sivakumar

    Hi,
    I have a flat in chennai that was purchased for Rs. 8 lakh in May 2004. Now I am constructing a house in my own plot that is situated in another part of chennai by getting a bank loan of Rs.42 lakh. Out of which I have availed Rs. 25 lakh sofar ( 14 th dec 17). After retirement from service on 30th Nov 17, I have got my settlement from my office. I therefore want to preclose the loan account with that money. In the mean time I want to sell my flat for Rs.35 lakh. It may take another 3 months . I need a clarification in this regard that,1) can I adjust the LT capital Gain ( may be around Rs. 18 lakh) against the bank loan of Rs.25 lakh+ interest,if it is settled prior to the sale of flat, as the construction is still going on. or 2) Have i to continue the bank loan still I sell the flat ? or3) My house is nearing completion – have i to stop the completion work still I dispose of the flat?
    I request your advice , please.

    Reply
    1. Team BankBazaar

      Hi Sivakumar, You cannot adjust capital gains against loans. You can get tax exemption by investing in residential property. You should use the funds from capital gains to purchase a new residential house within 1 year before or 2 years after the transfer date (sale/transfer of the original property). If you intend to invest your money in an under-construction residential property or construct your own residential property, the construction needs to be completed within 3 years from the date of transfer of the original property. It is up to you to decide whether you want to continue the loan or stop work on your house. This has no impact on your capital gains. Cheers, Team BankBazaar.

      Reply
  87. Sam

    Hi,

    Thanks for the blog, very good information posted. I have a query about the LTCG. We purchased a flat in 2009 for 30L, the flat is on my Wife’s name. Now we are selling this Flat for 75L, after Indexation, the LTCG comes to around 15L. We are also in the process of buying an under construction flat which will be completed in 3 years (Dec 2020). The flat cost is 40L. The new flat will also be in the name of my Wife (she won’t be owning any other flat).
    Queries:
    1. Though the under construction flat will be completed in 3 years (Dec 2020), we will be doing the registration much before almost a year from now. Will there be any Capital gain tax, in this case? What is the 2 year period after Sale, Is it the time period between sale of old property and registration of new residential property?
    2. Can we keep this whole amount 75L in mutual fund or equity shares for an year and then pay the 15L which is a LTCG to the builder as a part of Flat cost (part payment) and also complete the registration after an year? This way we can avoid the Capital Gains tax?
    Please suggest.

    Reply
    1. Team BankBazaar

      Hi Sam, To get capital gains tax exemption, you need to invest all your capital gains in a new residential property or invest in capital gains bonds. You need to purchase this property within 2 years of incurring the capital gain. For purchase of under-construction property, the construction has to be completed within 3 years of selling the property for which capital gains were incurred. Cheers, Team BankBazaar.

      Reply
  88. Raja

    Hi,

    I will getting some funds from selling my holding of around 1cr in ESOP’s which are not listed as of now. But the amount come under LTCG. I have few question around it :

    1. How much amount can I invest in bonds – (54EC). Also can i invest 50 Lac in this financial year and rest in next year.
    2. Can repay my home loan (about 45 lac) from it and save tax on the same.

    Reply
    1. Team BankBazaar

      Hi Raja, If they are listed shares, there is no capital gains tax. Since they are unlisted, you will have to pay tax at 20% on long-term capital gains after indexation is considered. The maximum limit for 54EC bonds is Rs. 50 lakhs. Repaying of Home Loan doesn’t get you tax benefits. You will have to purchase or construct a home if you are looking to save on capital gain taxes. Please consult a chartered accountant to check if you can save on taxes. Cheers, Team BankBazaar.

      Reply
      1. DILIP TATAKE

        Dear Sir,
        If a person holding a portion in a jointly held property, increases his share in the property [say flat] reducing the share of other owner, by investing funds in the flat by selling shares, will it amount to investment in housing property to save capital gains tax under section 54 of income tax act?
        Tatake

        Reply
        1. Team BankBazaar

          Hi Dilip, You will have to invest in a new residential property for getting capital gains exemption. Please consult a financial planner for better clarity. Cheers, Team BankBazaar.

          Reply
  89. Mani Narayanan

    I have purchase a Flat on 2003 for the cost of 9 L including Housing loan 4.5 l and paid for Interest 2.5 L and sold the Flat Dec 2017 sold for 25. L and two years for given 3 years rent and shown the IT for rental Income How much to pay the Tax this flat for myself with wife jointly
    Narayanan . M
    9042235925

    Reply
  90. C PRASAD

    my mother gifted me property in 2008 and i sold it in august 2015( after years) for 1800000 (eighteen lakhs) and bought a new residential flat on my name amounting for 1800000(eighteen lakh, which is exactly equal to selling price of previous, without registration fees) with in 9 months and before june 31st 0f 2016. i have not mentioned it during filing the income tax. is it required to be mentioned ? or ican neglect as LTCG are reinvested within one year to buy a residential flat.

    regards C PRASAD

    Reply
    1. Team BankBazaar

      Hi C Prasad, Ideally, you should mention the sale of a property while filing your Income Tax. It will help you claim a lot of benefits. Cheers, Team BankBazaar

      Reply
  91. Sitaram K

    I have purchased a residential flat X in 2013-2014 and after the demise of my Father in 2014, I have inherited a house Y and open residential land Z, which are bought around 25yrs back by my Father. Now, I wish sell off Y and Z and buy a commercial property A. How do I need take care of Tax and which month should I sell Y and Z to get maximum time of 2 years for re-investment into Commercial Property.

    Kind Regards,
    Sitaram,

    Reply
    1. Team BankBazaar

      Hi Sitaram, Kindly get a legal opinion on this matter. Cheers, Team BankBazaar

      Reply
  92. Ashish

    Hello sir/mam i have a question regarding capital gain bond . I wanted to know that if i sell my plot after five years and by online transaction i get an amount of 21 lacs and my LTCG is around 18lacs. Do i need to invest whole 21 lacs in capital gain bonds or i can take out my 3 lacs as cash and invest the LTCG of 18lacs in capital gajn bonds.
    And after 3 years of maturity of that bond i want to withdrawal all the money as cash so do i need to pay any tax at that time on maturity amount (say it becomes 24 lacs after 3years). So can i withdrawal all money 24 lacs as white money or i need to pay tax to make it white.

    Reply
    1. Team BankBazaar

      Hi Ashish, You have to invest only the amount of capital gains made for capital gains exemption. The amount invested in capital gains will be exempted but the interest earned on the bonds will be taxable. Cheers, Team BankBazaar

      Reply
      1. Ashish

        So i can withdrawl my maturity amount of capital gain bond after three years and i can use that money where ever i want to use without paying any tax on that and it will be treated as white money. Right?

        Reply
        1. Team BankBazaar

          Hi Ashish, You have to pay tax on the interest earned on capital gain bonds. The rest is tax-free. Cheers, Team BankBazaar

          Reply
  93. sanvedana

    Hello sir/mam i have a question regarding capital gain bond . I wanted to know that if i sell my plot after five years and by online transaction i get an amount of 21 lacs and my LTCG is around 18lacs. Do i need to invest whole 21 lacs in capital gain bonds or i can take out my 3 lacs as cash and invest the LTCG of 18lacs in capital gajn bonds.
    And after 3 years of maturity of that bond i want to withdrawal all the money as cash so do i need to pay any tax at that time on maturity amount (say it becomes 24 lacs after 3years). So can i withdrawal all money 24 lacs as white money or i need to pay tax to make it white.

    Reply
    1. Team BankBazaar

      Hi Sanvedna, You have to invest only the amount of capital gains made for capital gains exemption. The amount invested in capital gains will be exempted but the interest earned on the bonds will be taxable. Cheers, Team BankBazaar

      Reply
  94. Mukund

    Hello Sir/M’am,
    I recently sold a residential property ( on 23rd March 2018 ) jointly owned by me and my mother where in my mother is the first owner but I paid the complete amount of the property that also included home loan on my name. The property was sold in Rs 30 lacs where in 15 lacs got deposited on my account and rest 15 lacs got deposited on my mother’s account. I need following clarification. It would be of great help!
    1) Can the money in mother’s account be used by me to buy a new residential property only on my name so that no LTCG is levied on my mother’s income from previous sale of property ?
    2) The amount is in Savings account but I will be buying a new residential property within 2 months. Do I need to mention/file LTCG amount from sale of property while filing ITR in current financial year 2017-18 ? My mother is home maker and never filed ITR, does she also need to file ITR this time because of income from sale of property ?

    Reply
    1. Team BankBazaar

      Hi Mukund, Since the ownership is joint, the tax will apply to both you and your mother. It is best to file your income tax return even if there is no income. You might have to declare the income if the gains were made in this financial year. We suggest that you get the help of a chartered accountant. Cheers, Team BankBazaar

      Reply
  95. B Joweri

    Dear Sir,
    Thanks for giving valuable suggestion on LTCG. My case is expleined below;
    1. Purchased the land during the yesr 1998 for 1 L ( 30×40)
    2. Sold the plot in year 2018 April for Rs.50L
    Plese suggest on the following
    1. For LTCG calaculation how to calculate the present valuse as on 2001 ( as per govt ntification base year fixed as 2001)
    2. How to calculate the indexation?
    3. What will be Capaital gain tax?
    My planning is
    1. Pay LTCG for half of the capital gain
    2. Buy Givt Bontd for half of the amount.
    Please advise.
    Hear advise me clearly how to get the present value of the land value for the indexation purchase date as on year 2001.

    Regards

    Reply
    1. Team BankBazaar

      Hi Joweri, We suggest that you get the help of a property valuer to determine the fair market value. Also, get the help of a Chartered Accountant to calculate the gains. Cheers, Team BankBazaar

      Reply
  96. Regunathan

    Hi sir,
    Iam planning to sell our plot in Hyderabad for 7000 rupees per sq.ft…The guidance value is 4000 rupees per sq.ft.It is in the name of my father.I don’t want to sell in guidance value and don’t want to take 35 plus lakhs in black money.will I be able to sell it 7000 sq.ft?Do registrar office accept for selling in market value?All my known ppl ask me to sell in guidance value only.As a common citizen if we try to take money in black then no point in blaming the politicians of this country.I feel like this.Even the buyer insists for registering in guidance value and to take rest in cash (unaccounted).What’s ur opinion?In case I register in market value say (7000 sq.ft), how much my father will need to pay tax?he is a govt pensioner.gets around 35k per month as pension.How he can escape from tax deduction?All my known ppl say to buy one 2 bhk apartment and to avoid tax.But I want my father to keep that cash only.No point in buying more houses. already river sand is in shortage and smuggling is happening in river. I don’t want to ruin environment more. Please throw some light about having the cash and legal way of avoiding tax on capital gains.Thanx in advance.

    Reply
    1. Team BankBazaar

      Hi Regunathan, Kindly take legal help on this matter. Cheers, Team BankBazaar

      Reply
  97. aman

    Hello Sir,

    I have one residential property and one non constructed land. i want to sell the non constructed land to improve my residential property. can i claim deduction to the extent of cost of improvement of existing home.

    Reply
    1. Team BankBazaar

      Hi Aman, If you take a home improvement loan, then you can claim deductions on the interest paid. Cheers, Team BankBazaar

      Reply
  98. Richa

    I have two residential house. Out of which one was purchased in year 2005 for 5 lacs. And in 2018 it was sold for 56 lacs. How can I save my long term capital gain

    Reply
    1. Team BankBazaar

      Hi Richa,

      You can save on LTCG tax by investing the LTCG from the sale of your property in notified bonds issued by the authorities such as National Highways Authority of India (NHAI) or Rural Electric Corp. (REC) Ltd for a minimum period of 3 years (Section 54EC). However, you’ll need to invest the LTCG in capital gain bonds within 6 months from the date of sale (of property) or before the due date of filing income tax return (usually 31st July), whichever is earlier.

      Cheers,
      Team BankBazaar

      Reply
  99. K shrinivas

    Can I split the long term capital gains partially to invest in new property and partially to invest in capital gains bonds? is it permitted?

    Reply
    1. Team BankBazaar

      Hi Shrinivas,

      You can invest in both residential property and bonds. Please consult a chartered accountant for help.

      Cheers,
      Team BankBazaar

      Reply
  100. Team BankBazaar

    Hi, Disque en aluminium,

    We’re glad you like our articles. Keep reading our blog for more insights into the world of finance.

    Cheers,
    Team BankBazaar

    Reply
  101. S Ganguly

    I have sold a property (CGHS apartment) wherein the LTCG is 85lacs. I was the primary property holder and my mom was the co-holder. Is it possible that I invest 50lacs in NHAI bond and my mom invests 35lacs in NHAI bond to avoid LTCG tax.

    Reply
    1. Team BankBazaar

      Hi S Ganguly,

      The capital gains have to be divided in the proportion in which you hold the property. For more clarity, we suggest that you get in touch with your legal counsel.

      Cheers,
      Team BankBazaar

      Reply
  102. DHC

    E.g a flat inherited by a mother is sold in Aug 2017…so to take benefits of CGDS under various section of 54 what will be the final date or due date? Will it be 31st March 2018 or 31st July 2018 or more? I also need some clarity on ITR 139(1) & ITR 139(4) for the same purpose
    Also to mature capital gain deposit or close the accountis it mandatory to take permission of income tax inspector?

    Reply
    1. Team BankBazaar

      Hi DHC,

      31st March 2018 is the date for getting capital gain exemptions. You should have invested in the bonds by this time. Regarding capital gain deposit, ITR 139(1) and ITR 139(4), please consult a chartered accountant.

      Cheers,
      Team BankBazaar

      Reply
  103. Raj Kumar

    Dear Sir / Madam,

    i am a NRI and invested in LTCG of 4 Mutual funds. It is planned to use after 15 years used for child education and my retirement. in that case LTCG funds are eligible under tax slab implications or not.

    Reply
    1. Team BankBazaar

      Hi Raj Kumar,

      As of now, LTCG is subject to tax of 10% if the fund is held for more than one year. However, the tax laws might change. You may have to check the tax laws once again when you redeem the investment.

      Cheers,
      Team BankBazaar

      Reply
  104. Milan

    Mr X had purchased residential property in 2004. He also owns another residential property in another state.
    He wants to sell one of the property and buy 2 residential property for his two sons. How can LTCG tax be avoided?
    Cost : 30lacs
    Cost with indexation: 80lacs
    Sale price : 2cr

    Can he buy one flat along with son1 as co owner ( Father pays 1.2cr of capital gain) rest by son.
    Can remaining 80lacs be used to buy another residential property along with son 2 as coowner?

    Does above transaction involve any capital gain tax for son or father?

    How can situation be best managed?

    Reply
    1. Team BankBazaar

      Hi Milan,

      If there is a co-owner, the amount of capital gains exemption that can be claimed will be in proportion in which you hold the property. You may not be able to claim the whole invested amount as an exemption. For better clarity, we suggest that you get in touch with a chartered accountant.

      Cheers,
      Team BankBazaar

      Reply
  105. KALPESHKUMAR DHIRAJLAL SHAH

    My father sold his house property in August 2018, was purchased in 1985. we are two brothers. Before investing Long Term Capital Gain , he died in September 2018. Now how can we save tax on LTCG? Should we invest such money in Capital Gain Tax Bonds of NHAI in names of our two brothers? Shall we get benifit of saving of Tax? Please help.
    From : Kalpesh D. Shah.

    Reply
    1. Team BankBazaar

      Hi KALPESHKUMAR DHIRAJLAL SHAH,

      We are sorry to hear about the loss of your father. To know all about saving tax on long-term capital gains please visit the following link

      Cheers,
      Team BankBazaar

      Reply
  106. M.umesh

    Sir,
    Our old house was sold in 2016.Long term
    Capital gains , arising from this sale was
    Parked in CGAS.Tax exemption is claimed,
    and now the sale proceeds is being utilized for purchase of site and construction of a house.Now my query
    Is,as there is a lock in period of three years
    and this new house cannot be sold,can this property be transferred through
    Gift deed,as their is no exchange of money

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi M.umesh,

      Thanks for getting in touch. As far as we know, the property has to be in your name. For clarification, we suggest that you get in touch with your legal counsel. Hope this helps!

      Cheers,
      Team BankBazaar

      Reply
  107. M.umesh

    Sir,
    My query is can the entire sale proceeds
    Of a residential house deposited in
    Fixed account in bank ,as there is time
    to park the capital gains till the ,filing of
    Returns during the financial year

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi M.umesh,

      Thanks for stopping by. You need to either deposit the money in the capital gains account or buy capital gains bonds by the end of the financial year in which you sell the asset. We hope this will help you.

      Cheers,
      Team BankBazaar

      Reply
  108. ANIL ANAND

    We are 3 brothers inherited a property bought by my father in 1965 and constructed in 1966.
    We are now getting it reconstructed by a builder after after demolition of the existing structure.
    4 apartments are being made out of which one apartment is given to the builder with 25% of undivided share of land. and the builder will hand over the remainder 3 apartments one to each of us with some monetary consideration.
    I already have a flat elsewhere in my name.
    What are the documents required for calculating long term capital gains and how does my ownership of another flat affect my capital gains.

    Thanks

    Reply
    1. Team BankBazaarTeam BankBazaar

      Hi Anil,

      Thanks for stopping by. We would love to help but due to the specific nature of your question, we suggest that you get in touch with your legal counsel or financial advisor to sort this out. Hope this helps!

      Cheers,
      Team BankBazaar

      Reply

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