WHAT IS LONG TERM CAPITAL GAIN TAX EXEMPTION ON SALE OF PROPERTY AND HOW TO GET IT?

EXCLUSION ON CAPITAL GAINS

A home purchaser can guarantee exclusion on long-term capital gains charge & taxes, regardless of whether he is putting resources into various units, subject to specific conditions. As indicated by Indian expense laws, an assessed is qualified to claim exception on long-haul capital gains tax, at a sale of a property or some other resource, if s/he buys a residential house. In any case, there are a couple of hazy areas in this tax exemption. Capital resource normally alludes to anything that you possess for individual or venture purposes. It incorporates a wide range of property; portable or resolute, substantial or elusive, settled or circulating.

LTCG or Long Term Capital Gain is generally taxed at a rate of 20%, in addition to a CESS of 3%, which again is subjected to fulfillment of certain other pre conditions. Besides the concessional rate of taxes that are available on sale of capital assets, there are also certain other exemptions provided under the Income-tax law for capital gains that arise from the sale of the long-term capital asset.

The Income Tax Act has laid out exceptions under Section 54 and Section 54F to enable citizens to spare tax on capital gains.

• The exemption under Section 54 is accessible on long-term Capital Gain on selling of a House Property.   
• The exemption under Section 54F is accessible on long-term Capital Gain on selling of any asset other than a House Property.

REQUIREMENTS TO ACQUIRE TAX EXEMPTION

• A private residential property must be acquired or developed to guarantee the exception
•   The new property must be bought either 1 year before the deal or 2 years     after the sale of the property/resource.
• The residential property must be built within 3 years of selling off the property/resource
• In the event that one is not ready to put the predetermined sum in the way stated in above points before the date of tax filing or 1 year from the date of sale, whichever is prior, as per the Capital Gains Account Scheme, it is important to deposit the specified amount in a public sector bank.
• Just a single house property can be obtained or built.
• The exemption should not be accessible for properties purchased or built outside India.

HOW TO SAVE CAPITAL GAIN TAX RESIDENTIAL PROPERTY

When you fulfill these conditions and contribute wholesale proceeds towards the new house, in such cases, you won't pay any duty or tax on your gains. Be that as it may, on the off chance that you contribute a part of the sale proceeds, the exemption will be the extent of the contributed or invested amount up to the sale cost or exemption that equals to cost of new house multiplied by capital increases/net consideration.

CAPITAL GAIN BONDS

When in the event that you don't mean to buy another property, you can still spare the tax on LTCG by investing in bonds that are issued by the National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) specifically. These are redeemable following 3 years and must not be sold before the lapse period of 3 years from the date of selling off the property. A time frame of 6 months is allowed to put resources into these bonds – however to have the eligibility to claim this exemption, one has to invest before return filing date.