Tax is also to be paid on the income earned by selling property: You can save income tax by buying second house property, know the rules related to it here

Tax is also to be paid on the income earned by selling property: You can save income tax by buying second house property, know the rules related to it here

Whenever we sell any property, equity or mutual fund, we have to pay capital gains tax on the profits. However, these are some special rules to save tax, which allow a maximum deduction of Rs 10 crore. According to Section 54 of the Income Tax Act, if you sell a house and spend the proceeds to buy another house within the stipulated period (purchase within 2 years or construction of a new property within 3 years), then You can get tax exemption on the property by which you initially earned capital gain by selling it. Think of it this way, when you bought the house, its price was Rs 20 lakh. Now you are selling it for Rs 42 lakh. You made capital gain (profit) of Rs 22 lakh. Apart from 3% surcharge and cess, you will also have to pay 20% long term capital gains tax on this. However, if you buy another house from the sale proceeds of the old house, you will be exempted from this tax. You can also take advantage of the Capital Gains Account Scheme. Tax expert Sunil Garg says that if you do not use the money received from selling the house to buy a new house till the time you file the tax return, then that money can be transferred under the Capital Gains Account Scheme. Put it in a special account. Still, with that money you will have to buy a house in 2 years or build a new house in 3 years. Capital gains tax cannot be saved in these circumstances. How much tax is to be paid? According to Income Tax law, if the property is sold within three years of purchase, then the profit arising from it is considered as Short Term Capital Gain (STCG). This amount of profit made from selling the house or plot will be added to your total income and after that tax will be collected on it as per your tax slab. If you buy a property and keep it for 3 years and then sell it, the profit you make will be considered as Long Term Capital Gain (LTCG). On this type of income, you will have to pay tax at the rate of 20.8% after the benefit of indexation (property price increases over time).

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