An NRI who is selling his/her property in India often has a query ‘Do I need to pay tax if I sell my house in India?’ The answer is YES! If you own land or a residential property in India and you decide to sell it, you will have to pay the taxes on capital gains. There are two types of capital gains; long term capital gains and short term capital gains. Types tax implications on Non-Residents IndiansThere are two types of taxation on the house which are as follows:Long term capital gain taxWhen an individual puts up a property on sale after five years of holding period, the gains incurred from it are known as long term capital gains. Long term capital gain attracts a tax imposition of 20%.Formula to calculate long term capital gain isLong term capital = selling price- indexed cost).Short term capital gain taxIf you sell your property within 24 months from the purchase date of the house then it is known as the short term capital gain. The tax payable will be at the rate of 30% of the profit.Usually, the property owners prefer to sell properties after completing the holding period of 24 months as the tax implications are lesser and the long term capital gains can be exempted from taxes in some cases.
Wondering "Do I have to pay tax when I sell my house?" Let me help you know what the law says.In India, the sale of a house property can have tax implications, specifically in terms of capital gains tax. Whether you need to pay tax on the sale of your house in India depends on various factors, including the type of property (residential or non-residential), the holding period (how long you've owned the property), and the utilization of the sale proceeds.Residential Property:
Long-Term Capital Gains (LTCG): If you sell a residential property that you have owned for more than 2 years, the gains arising from the sale are considered long-term capital gains. These gains are taxed at a concessional rate, currently at 20% with indexation benefits.
Short-Term Capital Gains (STCG): If you are pondering over the question if i sell my house do i need to pay tax then consider this. If you sell a residential property that you have owned for 2 years or less, the gains arising from the sale are considered short-term capital gains. These gains are added to your regular income and taxed at your applicable income tax slab rate.
Non-Residential Property (Commercial Property):
The capital gains from the sale of a non-residential property are treated similarly to short-term and long-term gains as mentioned above for residential property.
Exemptions and Deductions:
There are certain exemptions available under Sections 54, 54EC, and 54F of the Income Tax Act that allow you to reinvest the sale proceeds in another property or specified bonds to save on capital gains tax. These exemptions are subject to specific conditions and timeframes.
Capital Gains Account Scheme:
If you are unable to invest the capital gains amount in another property before the due date of filing your income tax return, you can deposit the gains in a Capital Gains Account Scheme. This will allow you to defer the payment of capital gains tax until you utilize the funds for the specified purpose.
Tax Implications for NRI:
If you are an NRI (Non-Resident Indian) and you sell a property in India, you may have different tax implications. Tax rates and rules can vary based on your residential status and the type of property sold.
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Do I Need to Pay Tax if i Sell My House in India?
Gautam Venkatesh
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April 13, 2021
2021-04-13T09:49:39+00:00 2023-09-04T17:41:08+00:00Comment
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