269 COMMENTS

  1. in terms of STCG in real estate can this be offset by losses in Equity markets (less than 1 yr – STCG).
    Also when does the 3 yr period for calculating STCG/LTCG start – the day of Registering property by concerned authority or signing of Builder Buyer Agreement or letter of possession,

    • Pankaj, as per my understanding Short term capital loss from equity can be set off with Short term of gain from property and even with long term capital gain of property.
      and the 3 year period starts from the date of Registration or possession which ever is earlier.

  2. Dear Mr Singal, I bought my first house in 2002 and sold it in Oct 2014. Then 2008 I bought a second one jointly with my wife. Now my doubts are as follows:-
    1) Can i put the indexed capital gains to repay by second loan ?
    2) Can I transfer the only house that i have now to my wife’s name and thereafter buy a new property under Sec 54 with the indexed capital gain.
    3) What else can i do to save on LTCG ?

    Thanks in advance

    • Ajith, pls find my answers below:

      1. No. As to save capital gain there are 3 clauses – you either buy new residential property 1 year before selling off your existing property, or with in next 2 years of sale or you may construct a new house within next 3 years of sale. As you have bought your second property in 2008 , so you cannot repay the loan and save on capital gains tax.

      2. You can do that, but why do you want to do this. Section 54 does not restrict you to hold more than 1 house in your name to claim capital gain tax benefit. This condition is only when you want to save capital gain tax under section 54F.

      3. You can buy Capital gains bond under section 54EC with in next 6 months of sale upto maximum of Rs 50 lakh to save tax.

      • Dear Singal Sir,
        We are having a joint property which was owned by my grandfather. Now at present, my grandfather is expired & we selling the property. There are 4 share holder in the mention property & each will get around 50 lakhs each. I will also get 50 lakhs, but with those 50 lakhs i have to purchase one residential property for my servival. Now as per “section 54” says that i can save capital gain tax on sale of property which should be residential housing, by re-investing the capital gain amount into another residential property. Buying the new residential property in next 2 years from the date of sale of existing property.
        Do i still have to pay wealth tax 1% on my 50 lakhs?

          • Dear Singal Sir,
            First of all THANKS for sharing the information, but still i am litte confused. As i am re-investing the capital gain amount into another residential property (Buying the new residential property in next 2 years from the date of sale of existing property). Do i still have to pay any tax or file any income tax return? If yes, then pleaze kindly share the details that what are taxes i have to pay or file any income tax return. As per my small knowledge i am deposting the capital gain amount into capital gain account scheme, 1988. And same is going to be re-investing buying the new residential property in next 2 years from the date of sale of existing property.

          • No, as you will be buying property in next 2 years, you need not to pay any long term capital gain tax. You are doing right thing by parking sale proceeds in capital gain account. Now how to show this transaction while filing IT return has to be confirmed from CA.

  3. i purchased a flat in 1959 in chennai which i am selling now. am i have to pay incometax on full value on regular slab. viswanathan a.v.

  4. i want to sell my flat in chennai which i purchased in 1959. can i avail capital gain or i have to pay income tax on full sale value per slab. a.v.viswanathan

    • Capital gains on selling residential property is covered under section 54 of income tax act. You have 3 options to save indexed capital gain tax :
      – Buy Capital gain bonds of Rs 50 lakh ( maximum limit) from the the capital gain value, and pay tax on the rest of the amount ( if any)
      – or buy another residential house in next 2 years
      – or construct a residential house in next 3 years
      Till the time you buy/construct a new property, deposit the capital gain amount into Capital gain deposit scheme( bank a/c)

  5. Hello Sir,
    My father in law bought a land in Mumbai for residential purpose and built 10 years back. cost for was land 10 lac and for constructions approx 40 lacs.
    Now he is selling his house for approx 3 crores. I have below queries.
    1. how much amount will be taxable and what would be tax rate (%)
    2. can he buy 2 residential flats.
    3. He has house loan on the same property and outstanding is 30 lacs. will the loan amount be tax free if he pays loan from the said amount (3 crores).
    4. He wants to invest some amount in the fix deposit so that he can get monthly income from there. Is this amount tax free.
    5. He wants to buy 2 flats of 1.7 crores ( 1crore+70 lacs). What will be the taxable amount thn.
    6. He wants to buy one flat in his name and other in his daughter’s name. Is that ok or will there be any tax on the property which he is planning to buy in daughter’s name.
    Hoping your soonest response on above.
    Thank you

    • 1. This needs to be calculated. tax rate would be @ 20% on indexed capital gain. ( Sale price – indexed cost)
      2. yes.
      3. No
      4. He will invest in FD after paying capital gain taxes. and FD interest will be taxable in his hands.
      5. Capital gain tax can be saved by investing in residential properties.Read my article again for clarification. If the indexed capital gain from sale of your property comes out to be 1.70 crores, then by investing the complete amount in other residential property/ies you can save the entire capital gain tax.
      6. To save tax he’s to buy both flats in his name only.

      Thanks
      6.

  6. Dear sir,
    I sold a vacant site and got capital gains, and i invested the same in construction of a house property which falls in the stipulated time period.
    My question is i have another residential house property in my wife name and she expired recently, i have included rental income of that property in my returns and khatha is transferred to my name, But house is not transferred to my name. Am i eligible for the exemption under sec 54f?

    • I believe yes you can claim 54f benefit, as the transactions of selling site and constructing house property happened when your spouse was alive ( i assumed so). Still it is advisable to consult some CA on this query.

    • Yes. You have to buy residential property with in 2 years of selling the commercial one or construct with in next 3 years. You have to use complete sale proceeds otherwise you will get tax benefit on proportionate basis. Do keep a tax expert in the loop.

  7. Firstly a very good article, well written sir and most informative on the web. I have a couple of queries.

    1. If a residential or commercial property is owned by 2 people – can each of them buy a residential property each under 54 / 54f respectively and invest 50 lacs each so a total of 1 cr.

    2. If an individual is selling 2 residential properties together – can 2 properties be bought under section 54 with the LTCG separately or LTCG invested in a single property.

    3. How to invest in nhai or rec bonds

    4. Is plot in a developed society eligible under 54 /54f. If not then if we complete construction in 3 yrs then cost of plot be included.

    5. Any cost like TDS on sale or wealth tax etc is payable

    6. Trust the registration / stamp duty is included under cost of new property. How about brokerage / one maintenance deposit.

    Many thanks
    Jaideep

    • Hi Jaideep. Thanks for liking my article. Pls find my replies point wise. Also pls note that its wise to have a tax professional views on the same

      1. Yes
      2. From capital gains from 2 properties , 2 residential properties can be bought, even a single property would serve the purpose. However by selling one property one cannot buy 2 residential properties to save on capital gains tax.
      3. Visit any broker, or respecive companies website to download the form.
      4. You cannot save capital gain tax by buying plot, either you buy a residential property or construct one in 3 years. Yes, cost of buying plot would be considered in calculating capital gain tax saving.
      5. Buyer will deduct [email protected]% of purchase amount if the txn is above Rs 50 lakh. Wealth tax has been abolished in India.
      6. Yes, the Registration cost and Stamp duty will be part of total purchase cost.

  8. Sir, I bought a land in 1998 in my wife’s name out of my earnings. Sold it in 2015-16. I have intended to deposit in REC bonds to avoid tax.
    (1) Should I invest in my wife’s name or in it can be in my name
    (2) Can I invest in wife’s name as first name and my name as second applicant.

    Can you reply me at the earliest since I intend investing on 21st January 16.
    Thanks in advance

    • This is bit complicated. Since the land was bought out of your earnings gifted to wife, so technically this is your income and not your wife, due to clubbing provision. But since property is in your wife’s name so capital gain can be saved only when bonds gets purchased in her name.
      I believe, you should better contact some Chartered accountant for this query.

      • Thanks Sir. Upon discussion with tax experts, the amount has been invested in my wife name with nomination. They said clubbing provisions will come only after calculating the total income of my wife. Also the income on REC Bond’s will be added to my income in future.

  9. my father owned inherited commercial property around 80 lakh, now we planning to sell this.
    after capital gain tax of around 16 lakh{20%}. how to save tax on remaining amount? is father gift this money to mother and daughter? is it helpful

    • Gifting money would not save any tax already accrued to your father. Since he sold commercial property, so either he can buy a residential property out of complete sale proceeds or Invest in capital gain bonds ( with maximum limit of Rs 50 lakh) or can do both.

  10. Dear Mr.Singal,

    Thanks for the forum and the paintaking efforts you put in to clarify doubts of common man.

    I own a flat and is having one fourth share of joint property, jointly owned by four sons, through settlement deed of our father, who died in 2014.
    We have entered into a joint venture with one of the reputed builders, according to which, the builder will construct six flats of 1000 sft each and will take two floors and will give one flat for each of us. In addition, he will pay 14 lakhs to each of us and also rent for alternate accomadation. He has quoted 23 lakhs as cost of construction of each flat.
    How will capital gains calculated for above joint venture.Since , by selling 1/3 share , we get a flat and amount as mentioned above.

    How capital gains is calculated for such joint ventures.

    If i claim capital gains exemption under sec 54, sell the other flat, should i pay capital gains for that or can claim exemption under sec 54 or 54 f.

    Can I purchase another flat with my own funds and whether the cap gain exemption claimed under sec 54 will be reversed?
    If i sell another flat too , pay LTCG tax for the jv flat, claim CG exemption under sec 54 for the second flat sold?
    thanking you in anticipation
    v.m.perumal

    • I think, its better you consult some CA in your region with all the details. He’ll be able to guide you better.

  11. Dear Mr.Singal,

    Thanks for the forum and the paintaking efforts you put in to clarify doubts of common man.

    I own a flat and is having one fourth share of joint property, jointly owned by four sons, through settlement deed of our father, who died in 2014.
    We have entered into a joint venture with one of the reputed builders, according to which, the builder will construct six flats of 1000 sft each and will take two floors and will give one flat for each of us. In addition, he will pay 14 lakhs to each of us and also rent for alternate accomadation. He has quoted 23 lakhs as cost of construction of each flat.
    How will capital gains calculated for above joint venture.Since , by selling 1/3 share , we get a flat and amount as mentioned above.

    How capital gains is calculated for such joint ventures.

    If i claim capital gains exemption under sec 54, sell the other flat, should i pay capital gains for that or can claim exemption under sec 54 or 54 f.

    Can I purchase another flat with my own funds and whether the cap gain exemption claimed under sec 54 will be reversed?
    If i sell another flat too, pay LTCG tax for JV flat, claim CG exemption under sec 54 for the second flat sold?
    thanking you in anticipation
    v.m.perumal

  12. Dear Sir, My son resigned from employment in India and joined a company in US in December 2015. He has SB a/cs in India and also he trades in equities. The dmat a/c is linked to on SB A/c. This year he will become non resident. He has no other income in India. Please let me know: 1. When he should inform bank about his Non residenship to convert his SB a/c to NRO a/c? 2) I am told that NRO A/c interest will attract TDS. If so can he give Form 15G? Will there be TDS on sale proceeds on equities (All LOng term non taxable) credited to NRO a/c? If yes how to avoid that? Am I correct -that he can take amount equivalent to US$ 10,00,000/- per year from his NRO account ( my friend says it is US$100,000/-)

    • 1. He should immediately inform bank and get his account converted to NRO a/c. He also has to convert his Demat account to PINS a/c.
      2. No, NRI cannot give form 15G to avoid TDS. But yes, he can file ITR and get his TDS refunded if the total income in India is less than or equal to minimum prescribed.
      3. No TDS will be on Long term capital gain on Listed equity investments.
      4. The maximum limit of repatriation is UDS$ 1 million i.e. $10,00,000/- per year.

      • Sir, my son trades in shares only out of Indian money earned in India. He does not buy any shares out of income earned outside India. I checked with HDFC Securities Ltd. They say they will deduct 14% TDS on all sale proceeds. They were not able to answer me properly. My question is whether tax will be deducted when shares are sold and credited to NRO account.
        regards.

        • TDS is applicable on all taxable transactions done by NRIs, even if they have transacted from the money earned in India.But if the share sale happens after 1 year of holding then there should not be any TDS as LTCG on shares is tax free

  13. After selling the COMMERCIAL shop how can I save my long term capital gain tax?
    I do not want to invest in property and if in the 54EC bonds please tell me that if I have to invest the whole sale amount or I can invest only capital gain calculated after indexation.

  14. Dear Mr Singal
    My name is Sean.
    My Mother has sold a couple of residential property in June 2016 and I plan to buy a new flat with my name first & her name second Can she be 2nd joint owner by invest that amount in this property ? Will she get the benefit of section 54 or will she still have to pay long term capital gain tax?

    • Sean, on the face of it i don’t see any issue in this. Since i believe that your mother would be contributing her share to save on capital gains tax and she be the “beneficial joint owner” with a specific percentage of ownership registered in her name in the new property.
      But still i would prefer you should consult a tax expert on this matter and then decide.

  15. RESPECTED MANIKARAN SINGAL,
    I want your best advice sir..help me.
    I had purchased a commercial booth in chandigarh having value60 lac but registry value was 46 lac . i took bank loan for purchase it and i also took cc limit to start a business. In less than 3 yrs i sold it for 70 lac but registry value( white money) 63 lac. But the collector rate of that booth was 95 lac which was’nt the present worth of our booth market value. my buyer of this booth took stamp papers of 95 lac but made the registry of 63 lac.
    so now i want to know how can i get rid from this capital gain tax. is it possible in any way. i m not in a condition to pay tax due financial ill ness.
    PLEASE GIVE YOUR PRECIOUS ADVICE TO HELP ME IN THIS MATTER AS SOON AS POSSIBLE.

  16. Hello
    I run a propreitorship firm. I bought an Industrial Unit / Commercial office for 5.5 lacs in Dec.2002.
    I have been claiming depreciation on the same. The depreciated value of the property is now 1.9 lacs. If I sell the property today I will get Rs.60 lacs. Kindly explain incase if I sell the property what would be the Capital Gains tax implication. Whether it would be STCG / LTCG. Does depreciated value have any ramification on the Capital Gains tax. Will I get indexation benefit? What are the options available to lessen the tax burden.
    Regards
    Vijay

  17. TOTAL PROCEEDS FROM SELL OF RESIDENTIAL FLAT AFTER 6 YEARS FROM THE DATE OF PURCHASE, CAN IT BE DEPOSITED IN THE PPF ACCOUNT TO CLAIM TAX BENEFIT ON LTCG AND ALSO TAX BENEFIT ON THE INTEREST ACCRUED?

    • To save capital gain on sale of property you have to buy either another residential property or 54EC capital gain bonds. You cannot save capital gains tax by investing in PPF.

      • Dear Mr.Singal,

        Thanks for your information.
        As mentioned under 54EC, are Capital Gain Bonds are available in the market throught the year and where.
        Which are the Capital Gain Bonds, investing in which will not attract tax.
        in case the transaction is being made near the end of financial year, can it be invested in the Capital gain Bonds in the next financial year without attracting any tax laibility.

        Request your suggestion/advice.

        • You need to invest in 54EC bonds within next 6 months of the property transaction. You will get bonds from NHAI and REC. Maximum limit is Rs 50 lakh. You can save on capital gain tax, but interest from these bonds are taxable.

  18. Dear Mr Singal

    I want to sale my property in India and planning to buy a flat in Dubai, so it will my capital gain is tax able.

    Regards
    Baljeet Singh

  19. Sir I have two residential properties in pune and one in thane. I want to sale thanes property and want to invest that money in new property in thane only. So wheather I wil be liable for capital tax gain??

    • Selling a residential property and buying residential property in the specified time frame with the sale proceeds does not attract capital gain tax.

  20. please tell me
    like in India i have commercial property on pagadi basis.
    and want to sell this and avail long term capital gain
    then how it is possible.
    please reply me on my e mail address
    [email protected]
    thank you

  21. Dear Mr. Singal,

    Nice article. It is nice to get your appropriate opinion.
    I inherited 25 lakhs in 2016 as my share from a property owned by my Father, originally purchased in 1990 and sold in 2016. Can we get indexation benefit to calculate Capital gain?
    Can I buy another residential property to save Capital gain tax within Financial year 16-17, even if I already have two residential apartment in my name ? Is it under section 54 or advise any other section.

    Please advise,

    Ashwin

    • Yes, you can get indexation benefit, and also can buy residential property to save that tax. It is under section 54. If you have sold residential property then you can buy any other residential property, and it doesn’t matter if you already own some residential properties in your name. The restriction is only when you have sold non-residential property (like land/Commercial), in that case you should only have only 1 property in your name besides the one which you want to purchase new to save tax.
      One thing is not clear from your question – Have to inherited the property and then sold it or first the property was sold and then you have inherited the money?

      • Dear Mr. Singal,

        Thanks for your reply and advise. The property was residential and was first inherited by self and sibblings in 2014 after demise of our father and was sold in 2016 and my share dividing equally is around 25 lakhs without indexation.

        Ashwin

        • Fine. You can buy either buy a new residential property or invest in bonds to save capital gain (calculated after indexation).

  22. Dear Mr. Singal,
    I am in a cofused situation & feel only an epert can guide me to resolve the problem.
    I had sold my existing flat in November, 2011 & imidiately booked “under construction” flat
    by paying all capital gains earned as part payment, Now tghe real problem is the possesion, which was to be given within two years, has got delayed & there is no hope to get the ppssesion for next two years or so.
    Om taking up the matter, the builder ha asked me to wait or as an alternate he has offered me to surrender the booking against refund amount with 4% p.a. intrest for tyhe 3 years.
    now i want to know, this being geniune problem, what will happen to my capital gain tax benifit availed by me in the Finanacial year 2011-202. please advice if i will be liable for any penality, additional tax or intrest etc.
    thanking you in advance,
    R.U.Bhatia

    • I believe you should better consult a CA in your area and have his opinion. In my view the tax benefit claimed should be reversed and yes there should be some interest liability too, as the property construction was not completed in next 3 years as mandated by IT act.

  23. Dear Mr. Singhal,

    Sir, Myself and my wife owned a two bhk flat in Chennai for Rs.5.35 lakhs in 2002 being the joint owners that myself being the first owner and my wife second. We jointly sold this property for Rs.20 lakhs which was duly registered in November 2016. I hope the capital gain is Rs.14.50 lakhs for which either new property should be purchased latest by 31st July 2016 as the income from property will be calculated for the financial year ending March 2016. It is hoped that the new property will be purchased before 31st July 2016 for Rs.20 lakhs and more, or if not possible, I am sure the said capital gain of Rs.14.50 lakhs should be invested in a capital gain account in a nationalized bank before 31st July 2016. Anyhow the new property will be purchased in the name of my wife as a purchaser and I will not be a party to the purchase. Can she do it please. Secondly Can the capital gain account be opened by my wife alone or by me only or both. If both can my wife withdraw the money from the capital gain account for purchasing the new property. Please clarify on priority basis.

    Thank you
    Karthik

    • First thing first…let me start by clarifying that i am not a tax expert so you should better consult a CA in your local area and have his opinion.
      See, the capital gain would not be Rs 14.50 lakh, as you have not accounted for indexation. In rough calculation if your property was purchased in FY 2002-03, and sold in 2016-17, then your indexed cost of property comes out to be 13.46 lakh, and thus capital gain would be Rs 1.04 lakh, on which you have to pay tax @20%. This 1.04 lakh again is not a one person income , it has to be divided in you both…
      So first understand this and decide what steps you want to take in future

  24. Respected Manikaransir,

    I have one question, we are planning to buy a New commercial shop
    one of the agent asking to us in future after 3 to 5 years whenever you sell your commercial shop you can not buy New house of those money which you get from your commercial shop selling.

    Our question is that Can we buy a New home against commercial shop selling amount.

    Please guide us.

    • You can either buy a residential property or can buy 54EC capital gain bonds. this is all to save capital gain tax. if you want to pay tax no need to invest anywhere

  25. My wife has taken lone from me to purchase the residential property at Noida the same is under construction. Now she has sold her commercial property at Vadodara after 12 years and from these money received she is refunding the lone take from me for purchase of residential property.
    Please inform how we can save capital gain tax. Can I invest these amount for purchase of property and save Capital gain tax or only she has to invest

    • See, what capital gain taxation on sale of property says that either you buy a house within 1 year before the sale or within 2 year after the sale or construct a house within 3 year after the sale of property. Now if your purchase of house is 1 year before the sale then your wife may be eligible for tax benefit by repaying the loan to you, but I don’t think that buying under construction property satisfies the requirement.You should better consult a CA or Tax lawyer on this.

  26. Dear Sir,
    To save capital gain tax from residential property ,is it necessary to invest the capital gain only in one of the two options ie either in buying or constructing a residential property or purchasing capital gain bonds ?

    If the capital gain is 80 lakhs can one not save tax completely by buying/ constructing a house as well as buying NHAI or REC capital gain bonds? If investing in both is possible then can one save tax fully by buying bonds worth 50 lakhs and constructing house with 30 lakhs thus investing 50+30 = 80 lakhs fully.

    Pl also let me know if there is any ratio to be applied if investment is both in bonds and constructing a house.eg 60% of amount invested in bonds and 40% of amount invested in construction>

    Shall be immensely grateful for your early reply.

    • You can do both. Buy bonds worth Rs 50 lakh (since this is the maximum limit), and use rest to buy or construct property.

  27. Dear Sir, I sold a residential property and within 2 months purchased a residential flat and within 6 months invested in NHAI bonds? However, all sale proceeds were deposited into my Savings account initially. It is from here that I purchased and invested.
    Is it necessary to deposit sale proceeds in the “Capital Gains Account Scheme” account to avail the exemptions under sec 54? Can the sale proceed not be deposited in regular savings account and then purchase residential property or invest in NHAI? Please advise.

  28. Dear Sir, I sold a residential flat and purchased another residential flat within 2 months and then invested in NHAI within the 6 months of the sale date. The sale proceeds were transferred to my regular savings account.
    Please advise, if it was necessary or is it mandatory, to transfer the sale proceed to “CAPITAL GAINS ACCOUNT SCHEME” account to avail the exemptions under sec 54. Please advice.

    • Yes, it is important to put the sale proceeds in CGAS, but that is mainly required when the assessee is going to delay the house purchase/construction decision. Since you have completed your tax saving transaction within 2/6 months of sale transaction. so its ok

  29. Does laws for a sale of property that is not residential differ? i.e. for land/plot in an industrial area?
    And what are the laws when the residential status of the owner/seller is an NRI.
    Does NRI’s have any exemptions that they can avail for residential/non-residential properties?

    • Yes… laws differ in the case of Residential and non-Residential property. No exemption available to NRIs

  30. Can I invest the complete sale amount of non residential property in parts I. e. some portion in property and rest in bonds under 54EC

  31. I have this query. Much appreciate, if you can provide guidance.
    1. Sold one flat in Dec 16.
    2. Bought one flat : booked under construction in 2013, registration done in April 16. Q1: will this qualify as 1 year before? Q2: if yes, can capital gain benefit be claimed, even when holding another flat(s).

    • I guess yes. House is considered to be bought on possession date or Registration date, whichever is earlier. In your case, you have done the registration on April 16 and I assume have not taken possession yet, so this should be considered as before 1-year purchase and you can claim the Capital gains benefit here. Still, your Tax person should be in line with our thoughts, so better to consult one.

  32. Hello,
    I had sold my commercial shop and invested only the capital gain part in bonds of NHAI u/s 54 EC. Recently it came to my knowledge that the whole consideration had to be invested in them as it’s a commercial shop. My question to you is
    1) Can I invest the balance amount in the bonds now.
    2) if there is a NO for query 1 then will they calculate on prorate basis on the amount invested

    • 1.) Bonds to be purchased with in first 6 months of the sale. If 6 months are over, then no you cannot buy bonds now.
      2.) Yes

  33. Hello sir ,
    We will be selling our shop in august. I would like to ask you that do we need to invest the complete sale amount in bonds like NHAI or REC to make it tax free?
    Or
    Can we use partial amount to construct the house & rest invest in bonds ?
    For eg, suppose 20 lakhs is sale amount then, can we use 15lakhs to construct house & rest 5lakhs invest in bonds to make it tax free.

    • yes, you can do that. The partial amount for house construction (Not renovation) and partial for bonds purchase (maximum amount is Rs 50 lakh).

  34. Dear Sir
    i have got a flat thru a settlement deed dated june 2004 from my father.He retained life interest .He has passed away in Jan 2017. From what date do i calculate cost of acquisition index to sell the property now.

  35. Hello sir,
    I had purchased a commercial property a year ago now i want to sell the property and settle the loan. I want to know will i be charged any Property gain tax. If yes what percentage i will be charged and will it be on the gain or the selling price of the property.

    Regards
    Thank you.

  36. Hello sir,
    Last year i had purchased a commercial property, now i am planning to sell my property.
    I had two queries.
    1) Will i be liable to pay property gain tax.
    2) will i be liable to pay property gain tax on the gain or the selling price of the property.
    3) what will be the percentage of property gain tax.

    Regards,
    Thank you.

    • 1. Yes
      2. On the gain
      3. Since it would be short term gain, so will be added in your income and taxed as per IT slabs

  37. Hi sir read your article and questions & answers, it’s very useful.
    It will be very greatful by u if u reply my query

    My question is I have 1 small residential property since 1995 I sold it now and took home loan and bought 1 big residence .I also have 2 commercial properties since 1985. I m planning to sale these 2 commercial properties and payoff home loan from the consideration of 1property and buy another commercial property from consideration received from sales of commercial property. how can I save my capital gain . Plz advise

  38. Dear Sir, First let me congratulate you for such a nice article on the subject.
    My query relates to sale of residential property by my mother. My mother wishes to sell her house and wishes to buy a residential plot. The sale proceeds from the house is just sufficient to buy the plot only. Construction if any , will have to be done by other savings or loan. What will be the capital gain tax implications in such a case Sir? How can it be saved?

    • Capital gain from the Residential property cannot be saved by buying a residential plot. If you can buy Plot from other savings and use the gain amount part for buying the plot and part for constructing the house with in next 3 years of the sale then that can be shown as money used for buying and construction of the house. You will have to keep the proceeds in a capital gain savings account.
      It’s just usage of money in a mixed manner and planned way

  39. Dear Mr.Singal,
    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 ?

  40. Very nice and helpful article !! Is it possible to save capital gains tax partly by purchasing a new house in the stipulated period and partly taking bonds? e.g. if capital gains is 50 L , invest 20 in new flat and buy bonds for remaining 30 L ?

  41. Sir I sold commercial property. And sale proceeds are 57 lacs but capital gains are 24 lacs. Sir as you told above that to get exemption under section 54f, I have to invest entire sale proceeds (not only capital gain) in new residential property. Sir now my question is suppose I have invested only 3lacs in construction of house till date. Now I want to deposit in to capital gain account scheme before due date. So in this case do I have to invest (whole sale proceeds) or (sale proceeds less 3 lacs) or only capital gains amount.

    • If you want to deposit in capital gains account scheme, that means you have the intention to buy or construct the residential property in coming 2/3 years. Else you have to buy Capital gain bonds. The money (3 lakh) you have spent should be towards the buying or construction of the new property. If this is what you have done, then you may deposit Rs 57-3 lakh, else Rs 57 lakh as complete sale proceeds.
      Also whatever you will do, please keep your tax person in confidence

  42. Sir
    I have one one unauthorised shop in Thane w purchased on november 2013 fir ₹ 950000
    It has completed 3 years
    So what is appreciated cost of this amt. Today…non taxable
    Pl inform me
    Ur above article is nice one
    Thnx

  43. I have one one unauthorised shop in Thane w purchased on november 2013 fir ₹ 950000
    It has completed 3 years
    So what is appreciated cost of this amt. Today…non taxable
    Pl inform me
    Ur above article is nice one
    Thnx

    • I don’t get your question, Prakash. Unauthorised means? and how would i know the appreciated cost, you have to check the market rates. If you are asking about the Indexed cost of acquisition then please refer to the cost inflation index numbers mentioned in the article. Thanks

  44. My father sold his house in Oct 2016 and deposited the money from the sale into a capital gains account.
    My father and I booked another property as joint owners and paid 30% of the amount to the seller as an advance from my father’s capital gains account and got into a agreement-to-sell with the seller.

    The plan was that my father would reinvest the amount received from the sale of his property and I was to take a loan for the balance amount. Our share of the property would be proportional to the amounts we contributed. My father passed away last month before we could register the property. I have my mother.

    Please let me know if my mother should replace my father as the joint owner with me for the new property for us to save the capital gain tax resulting from the sale of my father’s house or how should the transaction be handled moving forward to avoid the capital gain tax.

  45. Sir, I have a residential house and an office for last 10/12 years. If I sell my office and earn capital gain, can I get tax exemption if I keep sale proceeds in capital gain account and construct a house within 3 years therafter?
    Bharat

    • Yes. Since you want to sell commercial property, so you have to invest the complete sale proceeds to get the complete LTCG exemption.

  46. DEAR SIR ,
    MANIKARAN SINGAL JI ,
    NAMASKAR.
    MAINE 2008 ME AEK SHOP 2 LACKS KO KHARIDA TTHA , AUR USSE 2017 ME MAINE 17 LACKS KO BECH DIYA HAI . ABB MUZE KOIEE NAYI PROPERTY NAHI KHARIDANI HAI . TTO MAI AB TAX KAISE BACHAU ?
    SHOP KABHI BHI RENT SE NAHI DIYA TTHA . YA USS SHOP KA KOIEE DUSARA BENIFIT NAHI LIYA HAI .
    KISINE KAHA KI YE LONG TERM CAPITAL GAIN NAHI MANA JAYEGA ?
    KYA YE SHORT TERM CAPITAL GAIN HAI ? AGAR HAI TTO MAI ABB KYA KARU ?
    TAX BHARANA PADA TTO SHAYAD BAHUT JYADA HOGA , MERE HATH MEE KITANE RUPAYE RAHE JAYENGE ?

    DHANYAWAAD .

    • Yes Long term capital gain ka case hai. Aapko tax bachane k liye ya to capital gain bonds lene chahiye ya koi aur residential property. Kyoki yeh gain ek commercial property se aaya hai, so aapko pura 17 lakh lagana hoga bonds mein, jo 3 saal k liye aapka paisa block kar dega.

  47. Dear Sir,

    I have a shop at Panvel which was registered with a cost of Rs.30L in 2013 July. After that i had spent Rs.5 L as maintenance charges+Renovation. Presently, I am going to sell the shop in 2017 Dec. My queries are:

    1. What will be the Capital gain & Its actual tax amount?
    2. Can I re invest the amount in Residential Property (Selling property is Commercial)?
    3. If I am eligible for above , all the selling amount (60L) OR only the Capital Gain amount need to invest to get free from Tax burden? – As I am planning to park some amount in Mutual Funds too.
    4. If I am not planning to invest in residential or any commercial, Can I invest all amount (60L) in Mutual funds ? If so , can I get any tax free consideration?
    5. To avoid capital gain Tax, I came to know to buy 54EC bonds. In this case also, weather I want to invest all selling amount (60L) or Capital Gain amount to get tax excemption?
    Request to reply on same

    • 1. The purchase cost and even the renovation cost have to be indexed before reaching out the capital gain amount. You have shared the year of purchase but not the year of renovation. I would recommend you to consult some local CA/Tax person and show him the papers to get the actual gain amount calculated.

      2. Yes. Buying residential property will help you in saving capital gains tax.

      3. Since you have sold commercial property, so this case comes under section 54F, and you have to buy residential property with the complete sale proceeds to save tax

      4. Pay tax first and then you may invest the remaining amount in Mutual funds.

      5. Complete sale proceeds to be invested in bonds in your case. The maximum limit of bond investment is Rs 50 lakh, so you have to pay tax on the remaining 10 lakh.

  48. sir
    i sold property in my name and now wat to buy property in my wife name from that sale proceeds can i get exemption in capital gain

  49. sir
    i sold property in my name and now want to buy property in my wife name from that sale proceeds can i get exemption in capital gain

  50. I have a property where in ground floor is used for commercial purpose and 2 floors are used for residential. If I sell the property how will the ltcg be calculated. What bifurcation will be available

  51. Dear Sh. Manikaran Singalji,
    Your article and replies are exhaustive and highly informative but I need to know my query as it is not covered above threads. I have a property in Delhi measuring about 250sq yd. I am intending to sale a part of it and build a house on the rest of the area (by demolishing the old structure fully).
    The plot was bought in 1971 & the house was built in 1985 (no proofs/receipts of expenses on construction is available with me now). My queries are:

    1. How will the LTCG be affected and will I get any benefits for this construction?

    2. What proof does the IT dept need for the new construction part(as the same builder will do both i.e. buy, register his part and construct new for the same amount, no money being given or taken)?

    I hope you will resolve my issue and advise as early as possible since your all advice are quite exhaustive and prompt in guiding in resolving LTCG issue. If possible kindly email the response or inform when the reply is put on your blog. I am a senior citizen, if that is relevant. Thanks.
    With best regards,
    Dr. M. Goswamy

    • Hello Mr Goswamy

      Though I think you should better consult a CA on this but below is my understanding of your query.
      When you sell part of your land that will bring in some capital gain, which calls for taxes. If you use the Indexed capital gain money in the construction of a house in next 3 years of sale then your tax liability should be adjusted in this.

      No Idea on Proofs. I believe there must be documents like sale deed, other bills of material and costs paid to the builder that should suffice.

  52. Dear Sir,
    I want to sell a residential property in three person (should i sell them in a single deed ? )and against it and i want to bye 3 residential plot (attached to each other) by three different persons. So in this situation what should i do to save capital gain tax under section 54?

    • You cannot save long-term Capital gain tax by buying a residential plot. You either have to buy a Residential house/Flat or have to buy land and construct a residential house on it.
      Selling residential property in joint names brings tax liability on all 3 owners. So every person buying another residential house should suffice the tax saving requirement.
      Do keep a tax lawyer or chartered accountant in the loop to have a better guidance on these transactions.

  53. dear mr Manikaran Singal doing a v good job. i own a plot and given to builder to develop as commercial as per sanctioned plan, written partnership with ratio further enhanced for compliance of delay reconstituted partnership with an mou -for his liability to deal with public authorities, for all purposes for now and arising in future if any, incl expenses etcs. Non compliance will entitle me to claim losses so incurred. one of the block without compliance cert from dev authy ,we jointly sold in 2016 and the C A calculated the tax and it was paid. NOW THE C A SAYS THAT, WE HAVE TO PAY REVISED TAX @30% , as that time he calculated @15% treating it as business asset transaction. And since the builder not yet obtained compliance ,it need to be regd with RERA WITH FEE. YOUR VALUABLE ADVICE PL and suggest steps as i live at hyd, and property is at D DUN.. THanks regds Prof h m k

    • Hello Prof. Kulshreshtha

      I am afraid I may not be able to guide you on this. Your CA would only be the better Judge

      Regards

  54. Sir,
    1. Can I purchase residential property through power of attorney to save capital gain tax.
    2. Can I purchase a plot / house / flat in an unauthorised colony through POW.In such case shall I get benefit of capital gain tax

  55. SIR,
    I WANT TO SALE A RESIDENTIAL PROPERTY AND PURCHASE A COMMERCIAL PROPERTY, CAN YOU PL ADVISE LONG TERM CAPITAL GAIN TAX ON SALE OF THE PROPERTY? THE NEW COMMERCIAL PROPERTY I AM PROPOSING TO PURCHASE IS VALUING MORE THAN THE SALE PROCEEDS OF THE RESIDENTIAL PROPERTY.

    • You cannot save Long-term capital gain tax on the sale of residential property by buying a commercial property.

  56. I PURCHASE SHOP IN 1994 RS 2.00 LAKES AND START A BUSINESSES IN 1994 NOW I AM PLANING TO RETIRE AND SHIFT WITH MY SON , NOW SHOP PRICE IS RS 60.00 LAKES I WANT TO PURCHASE A FLAT WHITEN SAME YEAR AT RS 65.00 LAKES . PLEASE ADVISE INCOME TAX ACT .
    THANKS & REGARDS,

    SANTOSH

    • Selling shop for 60 lakh, where the indexed gain would be less; and later buying a residential property for Rs 65 lakh will be helpful in saving the long-term capital gain tax on the sale of the shop.

  57. Hi
    My wife sell a commercial shop of X amount. Y is the long term capital gain on that.
    now i brought a property of which i got the possession in 2013 , ,and now registry of that is due in April 2018.

    Can we get registered flat on my wife name , and invest the long term capital gain amount that arrive from sale of shop in to the registry amount of the Flat. is this possible to skip the long term capital gain tax in this way?

  58. Dear Sir ,
    I purchase a Residential property in 2010 for Rs 45 lacs.
    I sold this property in 2017 for Rs 70 lacs , and purchased a new residential property in 2017 for Rs 1.37 cr
    Please let me know incase there is any LTCG implication.

    Thanks
    Subhankar

    • Your Actual LTCG comes to Rs 35 lakh and Indexed should be lesser than this. Your Purchase of residential property is far higher than the LTCG amount. So there should not be any LTCG Implication. Still these transactions needs mention in your Computation of Income tax

  59. Dear sir, In April lastyear in 2017 I bought a flat for 50 lacs.Now I am selling my Pagdi house for 49 lacs in April 2018 whose agreement is already signed by all the parties but it is still not registered.Can I claim long term capital gain tax N within what time the agreement be registered so that I can claim LTCG .Thanks

    • You bought for 50 lakh and sold for 49 lakh. There is no gain but the loss of 1 lakh.

      Besides this, you bought in 2017 and sold in 2018, thus this is short-term time frame not long-term

  60. Dear Sir, In april 2018, If a 3 person received the house as gift from his parents, what will be the index value of cost of acquisition and sell it in same month and recieved the money divided into equal parts, then every one invested the amount for purchase of commercial property which is the less than of sale value. Then how much amount of capital gain tax will payable to every one. Is there any time limit for paying the LTCG TAX

    • What I am assuming is that Gift was given through a registered gift deed and then all the siblings have sold the House, divide their shares and bought commercial properties.
      Indexed cost of acquisition would depend on the Cost and Year of purchase of the Residential property. But please keep in mind that buying commercial property is not an eligible transaction to save long term capital gain tax.

  61. Dear sir,I have 25 lakhs in capital gain account scheme.I would like to know if I can use 20 lakhs to buy land and 5 lakhs to construct house in that plot

    • Yes, Land is a part of the overall house and generally, a major part of the house purchase goes into a land only. Still, yours is a valid question, and I think you should better consult with your CA on this subject

  62. Dear Sir, Thanks for your reply, as the property was given to 3 person as per will on death of father, and sell the residential property after 3 years and purchase the commercial property by all 3 person, Please tell me it is treated long term capital gain and pay the tax to all person individually and how much

  63. Dear Singal Ji, Your discussions are very interesting and informative. My wife and I have two joint bank accounts (Either or Survivor type), one with her name as first holder (A/C A) and the other with my name as the first holder (A/C B). We have sold two properties which were exclusively under my wife’s name and also sold another property under our joint names. We can justify that my wife’s shares in the investments into the properties were actually earned by her, when she was working as a schoolteacher. We have then purchased a residential property under our joint names. The proceeds of all the sales were deposited in A/C A and all the payments for the new purchase were also made from A/C A. My queries are, considering that the accounts are joint accounts:
    i) The capital gains from my wife’s portion of property sales proceedings made up almost 50% of the new house purchase cost, hence technically she need not invest much more for 50:50 share. Since we have spent my 50% share for house purchase also from joint account A/C A, can we consider that the portion of my investment which has not actually been transferred from A/C B to A/C A is accruing interest (FD & Savings) in favour of my wife?
    ii) Though TDS has already been deducted U/S 194A (in AY 2018-19) in my name, can I consider in our current ITR’s that some of the money, equivalent to my share above, and the share of interest thereon actually belongs to my wife and she is the one who is liable to pay tax on that?
    iii) Do I now actually have to transfer the amount due to my wife, such that from next year onward the interest income gets taxed in her name?
    Regards
    S Sarkar

    • Dear Mr Sarkar
      Thanks for spending time and giving details of your Transactions. But I am afraid since there are so many links and connected transactions so to have a better guidance you should better consult a tax expert in your area and explain the query to him/her.

      My understanding and replies to your question may be wrong.

  64. My wife, who is a senior citizen, has sold a shop in Nov.2017 and deposited entire sale consideration in the loan account (Reverse Mortgage loan a/c). This loan amount has been used for purchase of a residential property, which is under construction, possession of which will be handed over in Sep.2019. Can she claim LTCG tax exemption by doing so. Please reply early.

    • When the Proceeds are not being used immediately to purchase or construct a residential property, then the rule says that money needs to be deposited in Capital gain savings account available with nationalised banks.
      In your case, though money was not parked into Capital gains account ultimately is being used for buying of Residential property only, so Ideally you should get the LTCG benefit.
      But Not sure how would the parking of funds be looked upon as.
      Mr Bindra …you should better consult a Good CA in your Area.

  65. Dear Sir, I sold my commercial shop in Mumbai in April 2018 after holding for 10 years, my query is what are the LTCG implications and how best to save on it, and also, is the indexation calculation same as for residential property?. Your Kind guidance is highly appreciated.

    • You have sold a Non Residential Property, so to save on LTCG taxation you have to use the entire proceeds and buy one Residential property. The condition is that you should be having only one more additional residential property beside the one you would be purchasing now.
      You may also buy 54EC capital gain bonds to save LTCG tax.
      Read On the complete article to have a fair understanding on the subject

  66. Sir, I got a commercial property in the year 2009 from MMRDA on compulsory acquisition of office due to road widening.
    This year in December 2017 that office is sold. Please suggest the impact of Capital Gain Tax and how to avoid the tax.

  67. Sir,
    i have sold the property yesterday and i have booked a flat in 2016, for which i have still to pay 10 lakhs, and posession will be in 2019 april. My Capital Gain is around 15 lakhs. and cost of flat is 35 lakhs. am i eligible to capital gain exemption?

    • In my view, You may claim Rs 10 lakh under LTCG benefit. Still, it is advisable to consult a tax expert in your local area.

  68. Sir,
    We are selling our ancestral urban agriculture land and we have made agreement with the buyer and he paid us Rs.35/- lakhs as advance in last 1.5 years. and we have decided to buy a Flat for Rs.52/- lakh and paid Rs.20/- lakh as advance to builder. now since our land buyer is not paying us his balance amount our Land Sale Deed is delaying and it may take another 1 year also.
    my question is as our builder asking us to get our final Flat Sale Deed complete if we now get final sale after making payments from advance received and rest from our side before the our Land Sale
    Deed complete in this scenario can we claim exemption u/s 54F.
    sir pls. reply…

  69. Sir,
    We have a commercial property in the name of our partnership firm where me and my brother are equal partners for around 18 years. We now want to sell it and buy a residential property in me and my brothers joint name. So my question is can i save on LTCG if all my proceeds from the sale is used to buy the said flat.Thanks in advance

    • I believe in this case tax can only be saved if the Residential property or 54EC bonds got purchased in the name of Partnership firm only, it being a separate tax entity. Though not completely sure. You better should contact a good CA in your Vicinity.

  70. Sir I’d given my house for redevelopment to a builder and got additional flats according to development aggrement. Now I have sold one flat which I assume is capital gain. Can I buy commercial shop on this amount. Will i still have to pay tax on capital gain

  71. Sir,

    I have sold a commercial shop that I had bought in August 2016 . Date of sale is in october 2018.
    Will this be treated as a short term capital gain or long term capital gain.

    Can I offset this gain against loss from futures and options transactions that I have carried forward from last year?

  72. Dear Mr Singal Good day !
    my father bought a commercial property in 1986. 2 yrs back he expired. we r 6 children. 2 of my sisters r abroad so we got a release deed done in our mother’s name in Aug 2018. we recently sold the property and divided the proceeds among ourselves. just today i got to know about the capital gain tax.
    could you pls let me know more about capital gain and how it is going to affect my mother and others details.
    how do we avoid paying this tax

    • Hello Ikram
      Tax liability will fall on the Legal owner of the property at the time of sale and will be calculated based on Sale value minus index cost of acquisition.I am not sure what have you done to transfer your sister’s share to Mother. if that was registered deed or not. So you need a tax expert/Lawyer in this case.
      If the property was legally transferred to all the heirs, and then sold out, then the tax liability will fall on the respective owner. which can either be saved by investing in the Residential property or by buying 54EC bonds.
      It is advisable to consult a Good CA in your Area and share with him/her all the details to calculate your tax liability.

    • Buying a Commercial property will not help in saving capital gains tax. You either have to buy Residential property or 54EC capital gain bonds to save this tax.

  73. sir i purchased commercial
    shop in 2004 and sold it oct 2018 and i want to purchase new shop within 6 month so sow can i save my ltcg

  74. Please guide me on the issue:

    I have bought the commercial shop in 1998 for Rs. 1,60,000/- and sold on 30/09/18 for Rs. 12,20,000/-.

    The said property i am utilizing as godown and filling the IT Return u/s 44AD so far and as a result the wdv in Balance Sheet in current year is 15,000/-

    Please guide me on tax computation for the same.

  75. Dear Manikaran
    Thank you for a comprehensive website and insightful articles. I have a query on section 54. I plan to sell multiple flats in one city and buy a single flat in GGN. Can I reinvest LTCG from multiple properties into a single flat. Also, I will be holding a single plot or may be 1 plot + flat thereafter. Also, understand from your article above that there is no issue on holding more than one property under section 54.

    • As far as my knowledge goes there is no limit of having properties as far as section 54 is concerned. You can sell Multiple Residential Flats and buy one Residential property to save tax.
      The issues come when you sell non Residential property which comes under section 54F. In that case, you can have only 2 properties in your name.

      Still, this is as per the best of my knowledge. You have to take professional CA’s advice too before taking any decision, as many times I have seen they have a different point of view.

  76. Dear sir,
    Could u pls.suggest on urgent basis as:

    I bought shop in 2007 & wants to sale in April 2019.
    My queries is, whether part(75-80%) of sale consideration can be invested in residential building as per 54F & balance (capital gain tax amt) in Bonds as per 54EC?

  77. Dear sir
    I bought shop in 2007 & want to sale in April 2019.
    My queries as:
    Whether I can buy residential flat under construction from 75-80% sale consideration amt.as per 54F & balance (capital gain tax liability after indexation) can be invested as per 54EC?

  78. On sale of commercial property, can we opt for majority amt.of sale proceed as per 54F & balance amt be invested as per 54EC to save capital gain tax?

  79. I have residential house which I booked in 1974 & got possession in 1980 @ Rs.151435.00 now I wish to sell in april’19 around two crores ..
    1. How to calculate present value allowed by income tax ..
    2. Suggest how to save tax .. Such as rural bond etc.
    Regards

    • You have to take the help of government approved valuer to reach the cost price of your house as on 01.04.2001, so you may adjust CII further and calculate the cost at the time of sale.
      To save tax you may buy capital gain Bonds or buy another residential house, or a mix of both.

  80. I want to sell my shop and buy another shop in different area. Do I have to pay capital gain tax from the sale even if invested in commercial shop. Is the benefit only if I invest in residential property.

    • Yes. You can save capital gain tax only by investing the sale proceeds/Gain amount as the case may be in Residential property only or Capital gain Bonds

  81. I HAVE SOLD ONE RESIDENTIAL PROPERTY AND ONE COMMERCIAL PROPERTY, AND INVESTED IN ONE RESIDENTIAL PROPERTY SO MY QUESTION IS CAN I TAKE EXEMPTION FOR BOTH CAPITAL GAIN ON SALE OF RESIDENTIAL AND COMMERCIAL PROPERTY???

  82. I HAVE SOLD ONE RESIDENTIAL PROPERTY AND ONE COMMERCIAL PROPERTY, AND INVESTED IN ONE RESIDENTIAL PROPERTY SO MY QUESTION IS CAN I TAKE EXEMPTION FOR BOTH CAPITAL GAIN ON SALE OF RESIDENTIAL AND COMMERCIAL PROPERTY??? PLEASE REPLY SOON

    • Yes, Poornima. If you have invested the Complete capital gains earned from selling of Residential property (Section 54) and Complete sale proceeds you get by selling the commercial property (Section 54F). There are further conditions on how many properties you are supposed to own before buying another to save tax u/s 54 and 54F.
      So you should better be in touch with some tax professional / Chartered accountant for this transaction.

  83. I sold a residential plot on Sept 2016 and bought a residential plot in Sept 2018 and started constructing a building which comprise of commercial office in the ground floor and residential house in the first floor. Am I eligible for capital gains tax exemption?

  84. Sir I wants to shell old house and purchase new house at high amount but new house purchasing one month before shell of old house how can capital gain tex save

    • Yes, you may do so. You can either purchase residential property 1 year before, 2 years after or you can construct anew residential house with in 3 years.

  85. Good day I purchase residential property in 2008 in 23 lakh and selling in 1 cr ready recknor rate is 70 lakh and want to buy commercial how tax will be calculated

  86. Hey! Real estate is surrounded by many income tax provisions. Starting from buying of property, keeping and maintaining the same and continues till selling it out.

    • We understand that you want to sell the house property and invest the proceeds in a commercial property for saving capital gains tax. If our understanding is correct, you cannot do so. You have to invest the sale proceeds in another house property or purchase 54EC bonds.

  87. i purchased two shop six month before . now i want to sell one. how can i save capital gain tax on sale of one shop.
    can i save capital tax like residential property .

    • You can save capital gains tax by investing the complete sale proceeds in a residential property. If you don’t invest complete proceeds then you will get an exemption on prorate basis, with the calculation as:
      Amount invested*Long term Capital gains/Net consideration

  88. I want to sell my commercial property which i had purchased from builder in 2007 and want to re invest in reconstruction of my residential home can i save capital gain

    • As far as we know, capital gains tax benefit would not be available in case of reconstruction of the property. Still, you may refer to some Chartered Accountant.

  89. I have sold residential flat which I was holding for 13 years. I made LTCG on the transaction. Can I set off this LTCG by investing in one more residential unit? Please note that I have in total 3 flats in my name.

  90. Bought a shop in 2005 for 7 .5 laks and now
    If i sell it for one crore … How much tax i owe to the government…

    How can i possibly reduce or save on my liabilities…

    • The cost (7.5 lakhs in your case) is to be indexed with the CII number of 2019 and that of 2005. Also, if you made any renovation to the shop, that also needs to be indexed with the current CII and the CII in the year of renovation. Sales Proceeds less this amount would be the Gain/Loss.
      We understand from your query that you are selling a commercial property, total sale proceeds should be invested in a residential property to get the full exemption of capital gains tax.
      To get the whole calculation and tax liability reduction, better, be in touch with some tax expert.

    • The cost (7 lakhs in your case) is to be indexed with the CII number of 2019 and that of 2005. Also, if you made any renovation to the shop, that also needs to be indexed with the current CII and the CII in the year of renovation.
      To get the whole calculation, better, be in touch with some tax expert.

  91. I want to know if I can buy commercial space/Shop by selling my residential flat. My residential flat would be delivered by my builder in lieu of JV with builder done in 2013 for plot of 1/2 acre land in Pune.

    • With whatever understanding we got from your query, you cannot save tax by selling residential plot and buying commercial property. Further, it seems that it is a business transaction, so the income would be considered as Income From Business and Profession and not under Income from Capital Gains. Further be in touch with a professional Tax expert, he can guide you better.

  92. Sell shop and use funds to clear home loan and further studies.. how can i minimize or eliminate caps gain tax… Approx sell price 1 crore. I bought a shop in 2005 for 7.5 laks approx…which i am using as a clinic till date…
    And purchase d a flat… My existing house ..four years back at a loan of rs 85 laks Now i want to wind up my clinic and go abroad for studies or a job… ( Finalising )

    • If you have purchased the flat one year before selling your shop, then you may be eligible for capital gains tax exemption, else you may have to pay tax and then clear off your home loan.
      Note that,if the sales consideration of your shop is of the same amount as the cost of the flat, then whole capital gain is tax exempt, else, pro-rate tax exemption would be allowed, with the calculation as Amount invested*Long term Capital gains/Net consideration.

  93. Hi Manikaran thanks for the good article.
    I brought flat in 2008 for 5.6 lac and now I am selling it for 14 lac. how much capital gain is there.

    also taking new house how much amount I have to reinvest to save tax.i si have to invest all 14 lac or as explained earlier only indexed amount I have to invest which is taxable.

    • The cost (5.6 lakhs, as you said) is to be indexed with the CII number of the year of sale with that of year of purchase, as Cost(5.6 lakhs)*CII year of sale)/(CII year of purchase).
      Also, if you made any renovation to the flat, that also needs to be indexed with the CII of the year of sale and the CII in the year of renovation and to be added to the cost.

      Sales Proceeds (14 lakhs, as you said) less this amount would be the Long Term Capital Gain/Loss.

      To get the tax exemption u/s 54, you may invest only the gain portion, in another residential property.

  94. If I sell a commercial property and want to save capital gains tax under section 54 EC, would i have to buy bonds only from the capital gains or the total sale amount?

  95. Sir, I am planning to sell my commercial shop which i got as my ancestral property in 1995. My ancestors got it in 1955. Sale realization is 12 lakhs and i want to invest in 54 ec to save tax ? Please sugest do i need to invest whole sale amount or only capital gain ?

    • Hi, i have inherited commercial property from my parents in 2001, if i plan to sell this property now,

      Details:
      Property purchased by my father for 2 lakhs in 1980, currently property selling price is for 30 lakhs,

      what is the percentage of LTCG tax on it as per 2020 taxation..?
      what are the options to save tax (if any), ?
      On what amount LTCG has to be paid ?
      For ex: if LTCG is 20%, do i have to pay 20% on 30 lakhs, or i get any option to reduce the amount by claiming inflation calculation, maintenance of last 20 years, expenses to sell the property…etc..

      Your advice will be helful sir.

  96. First you have to appoint a valuer for ascertaining the fair market value of the property as on 1st April 2001. This should be the cost of acquisition, which is to be indexed by taking the CII of the year of sale (289, if to be sold in FY 2019-20) with that of 2001 (100) to arrive at the Indexed Cost of Acquisition.
    The sale consideration (30 lakhs, as you said) would have to be deducted from the indexed cost, so arrived to arrive at the capital gain.
    The tax rate is 20% on the gain amount (if any) not the whole sale consideration.
    As far as tax saving is concerned, you have to invest the complete sale proceeds into some residential property or in section 54EC bonds of NHAI and REC, to save tax.
    If you don’t invest complete proceeds then you will get an exemption on prorate basis, with the calculation as: Amount invested*Long term Capital gains/Net consideration.

    Please consult a tax expert for the detailed calculation.

  97. Hi
    I have purchased a commercial property (INR 24Lac) with the amount of money that resulted from the sale of a residential plot of land (INR 21Lac).
    Can you please suggest me, if I can get the tax benefit on that.

  98. I have sold a plot in goa which i got from my mother…for LTCG tax….i am constructing my existing house….also i have an buy another new flat to save LTCG tax…or its only subject to one property thanks

  99. Is the registration date of property taken as the date of sale?
    Does the sale price of property when bought include the Interest paid on home loan when computing capital gain tax

  100. If you sell a commerical property in the state of California can you use the sales amount to buy a residential property without occurring capital gains

  101. I sold a residential property for 36 lakh in dec 2018 and purchased new residential house property for 38 lakh in jan 2020. i am claiming relief under section 54 . Now is there a possibility that i could sell my new property within year 2020 if yes then how

    • Since the holding period of the property is less than 3 years, the gain on the property would be short-term capital gain.
      In your case, no relief under section 54 would be available. The complete capital gain amount will be added to your income and you will be taxed as per the income tax slab you will fall into.

      • On what basis holding period is considered….. Date of Purchase to the date of sale or two assessment years to be passed?
        I purchased a flat in May 2019 for 40L and I am selling it in November in 2021 for 42L. What would be the capital gain/loss.

        • Hi Asif,
          The holding period is considered between the date of purchase and sale. As per the information provided, the indexed cost of the property comes to Rs.43.87 lakhs. So, if you are selling it at Rs.42 lakhs. So, it would be Long term capital loss of Rs.1.87 lakhs. However, for the detailed calculation, please consult a tax expert.

  102. What if I have one residential plot and one residential flat at the time of claiming exemption u/s 54 F.
    Can I claim exemption u/s 54F after sale of commercial shop and invested in residential house.

  103. I have purchased an industrial property from upsidc in yr.1993.inthe name of partnership firm. Now I have sold it worth rs.1.27 crores. How can i prewent capitalgain tax

  104. under section 54 can the assesse to save LTCG buy a property owned by his wife or relative who is a seperate individual assessee

    • First you have to appoint a valuer for ascertaining the fair market value of the property as on 1st April 2001. This should be the cost of acquisition, which is to be indexed by taking the CII of the year of sale (289, if to be sold in FY 2019-20) with that of 2001 (100) to arrive at the Indexed Cost of Acquisition.
      The sale consideration would have to be deducted from the indexed cost, so calculated to arrive at the capital gain.
      The tax rate is 20% on the gain amount (if any) not the total sale consideration.

      But do remember, if your spouse does not have any income then as per tax rules the gains are to be clubbed in your income and accordingly the tax liability would be decided.

      Please consult a tax expert for the detailed calculation.

    • Sir, proceeds from the sale of residential property should be invested in another residential property or in Capital Gain Bonds u/s 54EC to avoid capital gains tax.

  105. I got home as property from my late mother. Mother constructed home in before 2010.
    1. घर sale करने पर capital tax long term में consider होगा?
    2. Sale की पूरी amount as benefit consider होगी? पूरी amount invest करनी होगी?
    3. Tax कितने % देना पड़ेगा?
    4. Tax exemption के लिए कितनी बार invest कर सकता हूँ
    5. मेरे लिए best section कौन सा होगा section 54, 54F or 54 EC?

    • 1. Yes, the gains on sale of this house property would be considered Long-term Capital Gains.
      2. The sale proceeds would be taxable under the capital gains taxation. However, you may save taxes by investing the gain amount in any other residential property (section 54) or Capital gain bonds (section 54 EC).
      3. Tax rate on Long-term capital gains on property is 20%, with indexation benefit. To know the indexed cost, we have to first know the fair market value of the property as on 1st April 2001, if originally purchased by your mother, before 2001 and index the same as: Fair value*CII of the year of sale/100.
      If purchased after this date, then indexation would be:cost at which the property is purchased+cost of improvements (if any)*CII of the year of sale/CII of the year of purchase.
      The difference would be the capital gains, on which the tax rate would be applicable.
      4. You can buy the new residential property in next 2 years, before 1 year, or construct a new residential house in next 3 years from the date of sale of existing property.
      You may also open Capital Gains Deposit Account and deposit the gain amount before the due date of filing of income tax return for the financial year in which you would book your gains if you need some time to buy the new property.
      The other option would be to invest the gain amount in Capital Gain Bonds, upto Rs. 50 lakhs, per financial year, within the next 6 months from date of sale.
      5. Since the property, you are going to sell is a residential property, Section 54 F would not be applicable.

      • Thanks a lot sir. One more question, let’s assume deal done with one crore. Buyer says I would pay 30 lacs with Cheque (white) and balance 70 lacs in cash (black). How to adjust to that cash?

      • Thanks a lot sir. One more question, let’s assume deal done with one crore. Buyer says I would pay 30 lacs with Cheque (white) and balance 70 lacs in cash (black). How to adjust to that cash? Please respond

  106. Sold a commercial property for Rs. 46 lakhs on 20th March 2020 earlier purchased in 1978. The indexed cost of which in this year is Rs44 lakhs. Kindly let me know the options for me.
    TAX AMOUNT/REC BONDS

    • Since it is a commercial property, you have to invest the complete sale proceeds in a residential property or in capital gain bonds to save tax.
      If you don’t invest complete proceeds then you will get an exemption on a prorate basis, with the calculation as: Amount invested*Long term Capital gains/Net consideration

  107. Yes, you can do the same but after paying the capital gains tax on the gains accrued (if any). If you do not want to pay tax then you have to buy/construct another residential property or invest in capital gain bonds.

  108. I have opened a capital gains account in sbi after the sale of my residential building. Now can i invest this money in buying commercial property??

    • No, you have to buy residential property only if you want to save capital gains tax. As per rules, Investing in Commercial Properties would not help you save taxes.

    • To save capital gain on the sale of a flat (residential property) you either have to buy another residential property within 2 years or 1 year before the sale of property or you may also construct a property within 3 years from the date of sale of the property, from the gain amount.

      The other option is to invest the capital gain in the specified Capital gain bonds available under section 54EC, worth the capital gain of the transaction, within 6 months of the date of sale. However, the maximum amount to invest in these bonds is Rs.50 lakhs per financial year.

  109. I have sold a commercial property at 1 cr. The indexation cost is 65 Lakhs.
    To save capital gain tax at what price shall i purchase a new property

    • To save 100% of capital gain , you need to buy property valuing 1cr, since you have sold Non Residential property. Alternatively you may buy capital gain bonds. As in buy Rs 35 lakh of Capital gain bond ( as the capital gain value) and buy property of any amount as now the capital gain tax will be taken care by the bonds. Be in touch with some good CA for further calculation and clarification

      • 1. What if in case selling of residential property (land) of 1 Cr, and re-investing the same 1 Cr or more in another plot/ land (residential or commercial), do I avoid the tax completely?

        2. If so then in what duration I have to do such transaction.

        • Plot is as good as commercial property. The same rules of Section 54F would apply, i.e. you have to invest the entire sale proceeds into a residential property to gain full tax exemption on the capital gain. Else, you would get exemption on a prorate basis.

          You can buy the new residential property within 2 years after/1 year before the sale of the property or costruct it in the next 3 years.

  110. person having 3 residential property and if he sells one residential property thereby incurring LTCG and the amount is invested in another residential property does he get exemption from LTCG

  111. Is it true that if I sell a commercial property then the entire sale proceeds need to be reinvested in a residential property (not commercial) to save CGT. Also at the time can I be owning other residential or commercial properties. Thank you

    • Yes, this is true. Either you have to invest the entire sale proceeds in a residential property or have to invest the gain amount in Capital Gain Bonds to save Capital Gains Tax. As per our knowledge, there is a restriction of owning two residential properties, one prior and the other to save capital gains tax. For commercial properties, there may not be any restriction as such. But before taking any action, please consult a good CA or any tax expert.

  112. We have sold our parental (agriculture land) property cost 1 cr aprx
    Already we have two house in our name
    Can we purchase commercial property to save capital gain tax
    Please breef

  113. Is about capital gain tax, do i have any chances not to pay those taxes on a commercial property that i own for over 15 years?

    • In order to save Capital Gains tax, you need to either invest the complete sale proceeds of the commercial property in a residential property. The other option is to invest the gain amount in Capital Gain Bonds under section 54 EC.

    • No Abhishek,
      In order to save tax, you need to invest the sale proceeds from the commercial property in a residential property. The other way is to purchase capital gain bonds.

  114. I have purchase a Residensial property jointy with spouse for Rs 1.48 cr in 04 Nov 2019. I tried to sell my existing Flat before purchase , but I can able to get deal. So I paid money from my retirement benefits and fixed deposits. After 10 months I got a slightly better offer and sold my flat in Sep 2020 for 48.75 lakhs lesser than Stamp Duty of 60 Lakhs, because it was 20 year old flat and no one want to offer the circle rate.
    As the acqution cost of flat 10 Lakhs and indexed acq cost is 30 lakhs. and LTCG considering 50C will be 60 – 30 = 30 lakhs. 10 months earlier I have purchase New property jointly with Spouse for 1.48 Cr with 50 % share come to 74 Lakhs. I want to save the LTCG of 30Lakhs by showing the investment done 10 months earlier for Rs 74 Lakhs. I hope this will be leagaly correct. please answer.

    • Hello Mr. Vijay,

      According to section 54, you can save capital gains tax if you have purchased a residential property before 1 year of the sale of another residential property. Since you have purchased the residential property 10 months from the date of sale of the flat, as per our understanding, you can save the tax on the entire capital gain on the sale of the Flat. However, please consult your CA for the confirmation of the same.

  115. I am planning to sell my commercial property for around Rs. 15 lakhs . I already own 2 residential property in my name.
    How can i save LTCG.

    • Hi Manish,
      As per the provisions of the law, since you already own two residential properties in your name, you may not be able to save capital gains tax on the commercial property by investing in another residential property. In order to save capital gains tax, you need to invest the gain amount into Capital Gain Bonds, under section 54EC. However, please consult a good CA or any tax expert, before doing any transaction.

  116. I have sold a commercial property but the payment of the property will be done after i purchase the residential property.Will this be eligible for section 54 f(c)

    • Yes, you may be eligible for capital gain exemption under section 54. Still please be in touch with a CA or any tax expert before taking any action.

  117. HI ,
    i have purchased a plot for 55 lakhs and has given the same amount through cheque to the seller.

    Is there any possibility ways to save the tax for the seller?

    • Hello Mr. Reddy,
      To save capital gains tax on the sale of a plot, the seller needs to purchase a residential plot with the entire sale proceeds or invest the gain amount into capital gain bonds.

  118. Hi,
    I am planning to sell my 2 properties both are residential when purchased later both being used as commercial, Since being used as commercial is it considered as commercial or residential ?
    with this sold amount planning to buy residential old house and will be demolished to construct commercial. Is capital gain applicable ? or how many years I retain this purchased property as residential to avoid capital gain

    • Hello Mr. Murthy,

      As far as we know, if the registration of the property is done as a residential one then it would be considered as a residential property only. And you are buying another residential property only, so the capital gains tax would be saved.
      Still, please consult a tax expert in your area before taking any action.

  119. I want to sell my residential apartment which i purchased twenty five years ago. How can i save taxes on the capital gain which arises?

    • Hello Mr.Raja,

      To save capital gain on the sale of a residential property you either have to buy another residential property within 2 years or 1 year before the sale of property or you may also construct a property within 3 years from the date of sale of the property, from the gain amount.

      The other option is to invest the capital gain in the specified Capital gain bonds available under section 54EC, within 6 months of the date of sale. However, the maximum amount to invest in these bonds is Rs.50 lakhs per financial year.

  120. I also have a commercial property which i purchased in 1998. I want to sell the property. I do not want to reinvest the entire amount in a residential property to claim tax benefits. Is their any other options available. If i transfer the entire amount in a bank under the capital gain account scheme would i get the tax benefits exemption?.

    • Hello Mr. Raja,

      The purpose of depositing the amount in the capital gain account in order to save capital gains tax should be to utilize the amount in the purchase or construction of residential property only, within the stipulated time frame. If you do not use the amount in the purchase or construction of a residential property, you may be liable to pay the penalty for the same along with the capital gains tax due.

      If you do not want to invest the amount in a residential property to gain the full exemption of the capital gains tax the other option you have is to invest the gain amount in specified capital gain bonds of NHAI, REC, and PFC.

  121. Sir, my mother is a senior citizen. She owns a flat in her name which she wants to sell now. She purchased the flat in the year 1996. What are the options under Capital gain, in which my mother can save tax?. If the entire sale amount proceeds is transferred under the Capital Gain Account Scheme in a bank, will it be possible to save tax?.

    • Hello Mr. Raja,

      As stated above, the purpose of depositing the amount in the capital gains account should be to purchase or construct a residential property within the stipulated time frame.

      The options to save capital gains tax remain the same for senior citizens as well.

  122. A residential house was purchased by my mother in 2010. Now in 2022 after the death of my mother this house is transferred in my name. If I sale this house it will be a short term capital gain or long term capital gain.

    • Hi Amrinder,
      Since the house was purchased in 2010, the gains on selling the house would be treated as long-term capital gains.

  123. I own a Residential flat in a society, which after redevelopment will become a commercial complex and we will be allotted commercial offices in lieu. Once redevelopers demolish the building, when is the earliest i can sell to benefit LTCG. How can I save on tax

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