Buyers Guide

TAXATION:

Buying and selling of property may entail Long Term or Short Term capital gains. The Taxation and Treatment in both cases will vary drastically. Customers are requested to consult their Chartered accountants or Financial advisors well in advance of sale/Purchase.

Capital gain (or loss) is a profit (or loss) made while selling a capital asset eg; property – a house, an apartment, office space, commercial space,factory, warehouse or a plot of land.

Agricultural land is not considered as a capital asset, unless it is located within the limits of, or within 8 kilometers of a municipality.

When the sale price of a capital asset is more than its purchase price capital gain occurs.
When the sale price of a capital asset is less than its purchase price, capital loss occurs.
Capital gain is classified into two types, depending on the period of holding of the capital asset.

♣ Short Term Capital Gain (STCG)
♣ Long Term Capital Gain (LTCG)

Indexed value of capital asset needs to be considered for computing long Term capital gains.

If the capital asset is held for less than 36 months before selling, the gain arising from it is termed as Short Term Capital Gain. This short term capital gain is clubbed with your income for the year, and is taxed at a rate as per the applicable tax slabs / brackets. If the capital asset is held for more than 36 months before selling, the gain arising from the sale is termed as Long Term Capital Gain.

TDS ON PROPERTY SALE :

Govt. has made it mandatory under section 194 that buyer has to deduct one percent of the sale value as TDS and deposit the same in designated banks with PAN numbers of both buyer and seller. The Onus of deducting and depositing this is with buyers. Non-resident Indians may please check specific provisions applicable to them.