Calculate Income Tax on a sale of property

POSTED BY Kapil ON April 17, 2012 12:08 pm COMMENTS (23)

Hello Everyone,

Can anyone help me with calculating my tax liability on a property transaction?

Property Bought for – Rs.1, 05, 000/-
Property Bought On – March 26, 2008

Property Sold for – Rs.3, 10, 000/-
Property Sold On – Feb 28, 2012

Thanks in advance.
Kapil.

23 replies on this article “Calculate Income Tax on a sale of property”

  1. GK says:

    Hi Sir,
    I have land in XYZ location and i’m plan to buy constructed house in ABC location. so question is:
    –>whether i can buy house with home-loan first then after few months if I sell land i can use that full money to repay home-loan? since i’m re-investing money to property will tax on gain will exempted?

    If i have to sell land first then i might lose that property so help me understand tax section 54 with this scenario.

    Rgds,
    GK

    1. I dont think that will be possible as the land documents will be with the home loan company !

  2. Ahmed says:

    sir ,
    My dad sold the property in 2013-14 financial year for 5200000 which he used the amount for contstructing the other house n for our sister marriage…. n some amount was fixed diposit rs 1000000/- … a week back we received the notification from income tax department so i would like to know what kind of step do we need to take

    1. Hi Ahmed

      This query belongs to CA domain, hence we are not the right people to comment on this issue.

      I suggest you get in touch with a CA for this in your city.

      We also have a CA partner incase you want to explore that, Just fill in your details here and they will give you a complimentary call back

      https://www.jagoinvestor.com/solutions/ca-services

      Manish

  3. ShaliniRaturi says:

    sir i sale my plot Rs 1000000, 2013-14 and deposit amount on my saving a/c. I got Income tax notice that you have to e-file return f.y 2013-14 on Rs 1000000, i want to know how should i filled my income tax return and how should i calculate my tax on 1000000. I am also salary person

    1. Hi ShaliniRaturi

      A CA is more qualified to answer you query, hence I suggest better get in touch one.

      We are not right people to talk on this

      Manish

      1. ShaliniRaturi says:

        Thanx for reply

  4. RADHAKRISHNAN says:

    I HAVE PURCHASED A PLOT FOR Rs..400000/-IN 2010 . SIR I AM GOING TO SELL MY PLOT AT RS 6 LAC’S IN 2016. I AM SALARIED PERSON THEREBY I GET ANNUALLY 6 LACS NOW HOW MUCH INCOME TAX I WILL HAVE TO PAY FOR THE YEAR 2015-16. I DONT HAVE ANY OTHER BUSINESS . PLZ REPLY

    1. You will have to include this 6 lacs in your income for that year and pay the tax as per the slabs

      Manish

  5. itsvibhor says:

    Hi,

    Seek advise on proceeds realized from sale of property:

    TOTAL COST ————- Rs. 3 L in 2009

    Value after Indexation in Nov. 2015 = 3L X 1081 / 632 = Rs. 6 L /=

    Sale Value in 2015 —— Rs. 9 lacs

    CAPITAL GAIN — {9 – 6 } = Rs. 3 Lacs

    Tax in 30% slab 3 X .3 = Rs. 0.9 Lacs + 3% Cess on 9 Lacs = 2700 Total Rs. 92700

    I don’t want to invest in any property.

    What are the investment options available (tax free bonds/stocks etc – horizon 3~5 years) ?

    Thanks

    1. You can invest in NHAI bonds to save this

  6. kiran says:

    SIR I AM GOING TO SELL MY PLOT AT RS 12 LAC’S. I AM SALARIED PERSON THEREBY I GET ANNUALLY 3 LACS NOW HOW MUCH INCOME TAX I WILL HAVE TO PAY FOR THE YEAR 2015-16. I DONT HAVE FARM OR ANY OTHER BUSINESS . PLZ REPLY

    1. Indexation will apply in that case. Depends on which year you bought it

  7. Manish says:

    Dear Ashal,

    I have similar query. I am a salaried employee and my annual income is 6 lacs. So in the above scenario If I sell my house after 3 years and make profit of 1 lac then my taxable income will be 6 lacs + 1 lac = 7 lacs or do I need to pay tax separately on 1 lac applying above formula ?

    Regards

  8. TCB says:

    Dear Ashal,

    I stay in a house owned by my father (first name) and me (second name). My father is expired. Can I buy another residential property to save capital gains tax which I have to pay for selling a flat ?

    Thanks

    1. Dear TCB, yes is the answer. By the way, you are selling this same house in which you are living or it’s another house? Asking just to get clarification from your side.

      FYI – in case of property, there is no 1st holder & 2nd holder. There are merely holders. Yes shares of these holders may be defined.

      Thanks

      Ashal

      1. TCB says:

        Dear Ashal,
        Thanks for your reply. I am not selling the house in which I stay. I am selling another house and want to buy residential property to save long term capital gain tax. As I already own the house in which I stay, can I buy another property to save tax ?

        1. Dear TCB, yes you can purchase another house to save on LTCG.

          Thanks

          Ashal

  9. Dear Kapil, the gains are eligible for LTCG as the holding period is more than 3Y. Here is the calculation.

    A. Purchase Year = 2007-2008
    B. Cost Inflation Index of A above = 551
    C. Purchase cost = 105000
    D. Sell Year = 2011-2012
    E. CII of sell year = 785
    F. Indexed purchase price = 105000*785/551 = 149591 round about 149600 Rs.
    G. Sell Price = 310000
    H. LTCG = G – F = 160400
    I. Tax @ 20.6% on the LTCG = 33042 Rs.

    Thanks

    Ashal

    1. Kapil Malhotra says:

      Thanks Ashal for a descriptive response.

      1. Dear Kapil, you are always welcome. Please keep asking.

        Thanks

        Ashal

  10. See Cost Inflation Index chart here – http://www.caclubindia.com/forum/cost-inflation-index-table-chart-175456.asp

    2007-08 index was 551
    2011-12 index was 785

    So the notional cost price paid = 105000*(785/551) = 149591

    The sale price is 310,000

    Since property is held for more than 4 years the Long term profit = 310000 minus 149591 = 160408
    Tax to be paid = 20% of 160408 = 32081

    If you need to save tax check out the avenues mentioned in this article http://www.dnaindia.com/analysis/column_capital-gains-tax-on-property-decoded_1587254

    – Invest in Capital gains tax saving bonds/reinvest in another property

    1. Kapil Malhotra says:

      Thanks justgrowmymoney!!
      A very well response indeed!! I liked the article as well.

      Everything that I needed.

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