Hey,
You must pay capital gains tax on whatever property you sell, including real estate. Long-Term Capital Gains (LTCG) apply to properties held for more than 36 months, while Short-Term Capital Gains (STCG) apply to properties held for less than 36 months.
In the case of STCG, the earnings made from selling land are included in the owner's taxable income, and they must pay taxes in accordance with the income tax bracket they are in at the time. The current tax rate for LTCG is 20%.
HOW TO CALCULATE CAPITAL GAINS ON THE SALE OF LAND?Here is how you can calculate the capital gains from selling land-
STCG- Capital Gains Tax
You must subtract the acquisition cost, improvement cost (if any), and sale-related costs from the sale price if you are selling the land within 36 months of when you bought it. Your STCG will be this.
So, if you purchased the land at ₹ 10 lacs in 1985 and sold it for ₹ 1 crore in 2023, then, the difference between these two amounts will be added to your total income and tax will be levied based on the tax slab you belong to.
The STCG tax calculation is simpler. The land sale's profit is added to the household's overall income. According to the slab rates, the income is taxed.
LTCG- Capital Gains Tax
The indexed acquisition and improvement cost can be subtracted from the sale price in LTCG. As the expense of acquisition or upgrade increases, this assists in lowering your capital gains.
The cost inflation index is a crucial factor to take into account when calculating long-term capital gains (LTCG) (CII). Every year, the government releases this indicator. A key component in calculating the indexed cost of acquisition and improvement is CII.
The cost Inflation Index is equal to the product of the index for the transfer and the index for the acquisition.
I hope this was helpful to you.
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A piece of Agricultural Land of One Acre near Bangalore City which was Rural in 1985 and now became Urban due to the development and expansion of the City. It was purchased then for Rs. 10 lakhs and is sold now in 2023 for Rs. 1 crore. what would be the actual amount of Capital Gains Tax payable now?
D. Prabhaker
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2023-02-08T09:40:13+00:00 2023-02-08T09:57:45+00:00Comment
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