Buying or selling property in India? Know all about the tax implications (2024)

FAQs

Buying or selling property in India? Know all about the tax implications? ›

During the sale of property by an NRI, the buyer is responsible for deducting Tax Deducted at Source (TDS). The standard NRI TDS on property sale is 20%. However, if the property is sold before two years (as calculated from the date of purchase), a higher TDS for NRI property sale (30%) will be applicable.

The LTCG Tax is applicable when a particular property is sold after 24 months of buying it. The time period was reduced from 3 years to 2 years in Budget 2017. The rate of LTCG Tax is 20%. This is over and above the regular income tax payable by the seller, on the income earned through salary or business profit.

Buyers are required to follow TDS regulations, deducting 1% on the higher value between consideration or stamp duty value under Section 194IA. Taxation for sellers varies depending on whether the property is treated as stock in trade or a capital asset.

Tax: Long-term capital gains on sale of house property are taxed at 20%. For a net capital gain of Rs 63, 00,000, the total tax outgo will be Rs.12,97,800. This is a significant amount of money to be paid out in taxes.

Income Tax Rules for NRIs

TDS with 20% shall be levied when the NRI bought the property via the non-resident and LTCG is taken. On purchasing via resident, NRI should deduct a 1% TDS when the sale rate surpasses Rs 50 lakh. Up to 80% of the whole property value, NRI can avail for the home loans.

A NRI is permitted under Reserve Bank of India (RBI) rules to sell a property they own in India. There are restrictions about who they'll be able to sell properties and land to¹: Most properties can be sold to a resident of India, or another NRI.

If you've taken a home loan for the purchase or construction of a property, then you can claim exemptions under this section even before buying or initiating the construction of your house. However, you have to complete the construction within three years to claim the maximum tax^* deduction of ₹2 Lakh.

In India, owners of real estate properties are subject to pay a property tax. It is an annual charge levied by the Government of India on property owners. This tax is collected by the local government or the Municipal Corporation, whoever is authorised to do so in a given state.

No, since the property is registered in another person's name, paying taxes does not give anyone the right to take possession. So you don't have to worry about that. But you must change the name in the property tax to avoid future disputes. Tap here to get the property registered to your name from NoBroker today.

Do senior citizens have to pay capital gains tax in India? ›

For senior citizens, short term capital gains will be exempted from tax if the limit of 15% is not altered. In addition to this, there is a tax exemption provision under section 80 L. As per this section, they can avail an exemption on interest up to Rs 12,000 p.a.

Section 54F of Income Tax Act: Capital Gains Can Be Invested Multiple Times To Buy A New Residential House Property. Income Tax allows exemption on the long term capital gain if you invest in a new residential property subject to certain conditions.

The senior citizens are not exempt from paying capital gains tax. Capital gains tax is applicable to individuals, including senior citizens, on the profit earned from the sale of capital assets such as real estate, stocks, and mutual funds.

Indian residents below 60 years of age will be exempted from paying Income Tax on short term capital gain on sale of property if the profit stays within Rs. 2,50,000. Indian residents between the age of 60 to 80 years will enjoy a higher exemption limit of Rs. 3,00,000 on the sale of a property.

Long-term capital gain = Final Sale Price – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where: Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

Short-term capital gains are taxed as per the income tax slab rates applicable to the individual. For instance, if the short-term capital gain is Rs 6 lakh and the person falls in the 30% tax bracket, then he/she has to pay 31.20% on Rs 6 lakh, i.e. Rs 1,87,200.

Section 54 of the Income Tax Act states exemption on long-term capital gains for the sale of a residential property. An entire capital gain needs to be invested to claim full exemption. When all capital gains are not invested, the leftover amount is charged for taxation as long-term capital gains.