Calculate LTCG & STCG Tax on Property- Any profit or gain that results from the sale of a “capital asset” is referred to as a capital gain. Real estate, stock, mutual funds, jewellery, trademarks, and other investments. are considered capital assets. Since the gain or profit is viewed as “income,” you must pay taxes on that particular amount in the same year that the capital asset was transferred.

1. Calculate LTCG & STCG Tax on Property in India for
Capital Gains
Any profit or gain that results from the sale of a "capital asset" is referred to as a
capital gain. Real estate, stock, mutual funds, jewellery, trademarks, and other
investments. are considered capital assets. Since the gain or profit is viewed as
"income," you must pay taxes on that particular amount in the same year that the
capital asset was transferred.
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Additionally, capital gains do not apply because an inherited property simply
involves a transfer of ownership rather than a sale. According to the Income Tax
Bureau, gifts and inherited property are specifically exempt. If the inheritor wanted
to sell the property, capital gains tax would, nevertheless, be due. This blog has
discussed a wide range of capital asset categories, the calculation of capital gain tax,
and much more.
Newest capital gains tax news
Debt mutual fund capital gains will be taxed using the Income Tax Slab
March 31, 2023: Capital Gains Deduction maximum of Rs. 10 crore Finance
Minister Nirmala Sitharaman proposed a limitation of Rs. 10 crores for the long-
term capital gain tax exemption in the Union budget 2023. The new limit will take

2. effect on April 1, 2023. Reinvestment in residential properties is now eligible for the
deduction under Sections 54 and 54F of the Income Tax Act. You can deposit long-
term capital gains tax through the Capital Gains Account Scheme, which can then be
reinvested in assets covered by Sections 54 and 54F. Major public sector banks
provide capital gains account plans.
The Income Tax Act contains provisions in Sections 54 and 54F for claiming long-
term capital gains on the sale of real estate and other capital assets. Additionally, it
involves reinvesting funds while purchasing a residential property.
In order to better target tax breaks and exemptions, Nirmala Sitharaman, the
minister of finance, proposed lowering the deduction for capital gains on
investments in residential properties under sections 54 & 54F to Rs 10 crore.
According to a document made available by the ministry, the main objectives of
Sections 54 & 54F of the Act were to reduce the severe housing shortage and to
encourage the house building industry. However, it has been noticed that high-net-
worth assesses are making claims of significant deductions under these provisions
by purchasing extremely expensive residential properties. The very purpose of
these sections is being undermined.
March 2023: The Lok Sabha approved the Financial Bill 2023 on March 24, 2023,
after receiving more than 45 modifications. The fact that capital gains from debt
mutual funds will henceforth be regarded as short-term capital gains is a significant
development.
Beginning on April 1, 2023, the long-term capital gains computation for debt mutual
funds would no longer include an indexation advantage as per the Budget 2023
amendments. Debt funds that only have a 35% equity share investment would be
subject to the current income tax bracket and classified as short-term capital gains.
Similarly, bank fixed deposits are taxed.
What therefore should investors in debt mutual funds do?
Individual investors have until the end of March 2023 to invest in debt mutual funds
if they want to take advantage of the indexation tax benefit. The indexation benefit
will continue to apply to investments made up to March 31, 2023, or until they are
redeemed from mutual funds.
The Rajya Sabha will now receive the amended Finance Bill. Additionally, it applies
to domestic equity FoFs, gold, and overseas equity FoFs. The changes would take
effect on April 1st, 2023.

3. The taxation of equities shares and equity mutual funds was not changed by the
government. If LTCG exceeds Rs 1 lakh in a fiscal year, those taxes will be levied at
10% without an indexation advantage.
How to Define Capital Assets
Any property owned by an assessee, including real estate, buildings, jewellery, cars,
machinery, patents, leasehold rights, & trademarks, is referred to as a capital asset.
Capital assets include all types of legal rights, including management rights.
Special Cases for Capital Assets
The subsequent items are not regarded as capital assets: -
 Any business stocks
 Consumables or inputs for a trade or vocation.
 Clothing or furniture are not thought of as capital items.
 Indian rural districts with agricultural land
 Gold Bonds of any form, including those from 1977, 1980, Special Bearer
Bonds, and National Defence Gold Bonds
What Are the Different Types of Capital Assets?
Assets classified as short-term capital assets (STCA) are those held for 36 months or
less. The 36-month tenure for immovable properties, such as buildings, homes, or
land, has been lowered to 24 months in the FY 2017–18. As a result, if you sell your
property after 24 months of ownership, the income will be regarded as a short-term
capital gain.
Long-term capital assets (LTCA) are assets kept for a period of time greater than 36
months. As a result, if you sell your property after more than 36 months of
ownership, the proceeds will be regarded as a long-term capital gain.

4. Tax Table for Asset Sales
A rate chart for taxable income from the sale of assets is provided below:
Asset Duration of asset Rate of tax
Mutual funds (focused on
equities)
Short term: Less than 12
months
If short term then 15.45%
Long-term: More than 12
months
If long term, then it is
exempted
transportable property,
such as houses and
structures
Short term: 24 months or
less
If short-term, the income
tax slab rate will apply.
Long-term: more than 24
months
If long-term, then
indexation at 20.6%
Mutual funds (debt
oriented)
Short term: Less than 36
months
If short term then the
income tax slab rate
Long-term: More than 36
months
If long-term, then 20.6%
with indexation
Jewellery, royalty, and
other movable property
Short term: 36 months or
less
If short-term, the income
tax slab rate will apply.
Long-term: spanning over
36 months
If long-term, then
indexation at 20.6%
shares that are traded on
a market
Short term: Less than 12
months
15.45% if it is short-term.
Long-term: More than 12
months
It is exempted if it is long-
term.
How to Calculate Property Capital Gains Tax?
The duration for which a property has been owned affects how capital gains are
calculated. However, let's first learn a few phrases that are essential for calculation
before we start with the methods to compute capital gains:
 Full Value Consideration: The amount paid by the seller for his capital asset
at the final sale price.
 Cost of Acquisition: This is the asset's value at the time the seller pays for it.
 Cost of Improvement: Cost of Improvement is the price a seller pays to make
improvements to a capital asset.
 Cost of Transfer: The cost of transfer includes any fees incurred during the
sale of the asset, such as register fees, brokerage fees, or other costs.
 Indexed Cost of Acquisition: This cost is calculated by utilizing the Cost
Inflation Index (CII) to adjust the inflation values over the years that the asset

5. was held. Additionally, this cost can be interpreted as either the FY 2001-
2002 (whichever is multiplied by the cost of acquisition later) or the CII of the
years in which the asset was bought and sold by the seller.
 Indexed Cost of Improvement: This cost is calculated by dividing the cost of
the necessary improvement by the cost inflation index for the year, then
multiplying the result by the CII for the year the improvement actually took
place.
Short-term versus long-term capital gains: Differences
The table that follows highlights some of the key distinctions between short-term
and long-term capital gains.
Categories Short Term Capital Gain Long Term Capital Gain
Risk Involvement Due to the brief period of
the transaction, there is
little risk associated.
Due to the extensive
waiting period, long-term
investments carry a
higher risk.
Meaning Investing in short-term
capital assets might result
in short-term capital
gains.
Investments in long-term
capital assets can result
in long-term capital gains.
Taxability Short-term capital gains
are subject to a 15% tax.
A fee is not included in
this.
Short-term capital gains
are subject to a 20% tax.
However, if you meet
certain qualifying
requirements, it can be
reduced to up to 10%.
Amount of Profit Attained Due to the investors'
ability to hold onto the
assets for a little period of
time, the profit realized
may be reduced.
Assets retained in the
market for a longer
period of time result in
long term capital gains.
Market Aspect These capital gains are
quicker to achieve since
they are the outcome of
investments made with a
short-term market
outlook.
Since they result from
assets that have been
invested for a long time,
long-term capital gains
are typically larger in
size.

6. Calculation Method for Short-Term Capital Gains
The calculation for short-term capital gains is as follows:
The final sale price less the total of the indexed purchase, improvement, & transfer
costs is the long-term capital gain, where:
Calculation Method for Long-Term Capital Gains
The formula for calculating long-term capital gains is as follows:
Long-term capital gain is the final sale price less the sum of the indexed purchase,
improvement, and transfer costs, where:
Cost of acquisition multiplied by the cost inflation index of the year of transfer/year
of acquisition equals the indexed cost of acquisition.
Indexed cost of improvement is calculated by multiplying the improvement cost by
the cost inflation ratio of the transfer and improvement years.
To better comprehend the computations for long-term capital gains, let's use
an example.
Let's say Mr. Gupta spent Rs. 15 lakhs on a piece of land in 2006. For private
reasons, he sold the plot in 2016 for Rs. 40 lakhs.
Assume that the Cost Inflation Index (CII) is equal to 1024 divided by 480 for the
financial year 2016–17 and the financial year 2006–2007, respectively.
Indexed cost of purchasing is calculated as follows: CII x purchasing Price (2.13 x
15,000 = 31.95)
Selling price - Indexed cost = 40,00,000 - 31,95,000 = Rs. 8,05,000 for long-term
capital gain.
20% of Rs. 8,05,000 is the capital gains tax, or Rs. 1,61,000

7. The table below explains how long-term capital gains tax is calculated:
Particulars Amount
Gross Long Capital Gains Rs 31,95,000
Less: Indexed house improvement
cost*cost index of 2006 (117)/cost
index of FY 2016 (254)
No house improvement cost
Less: Any transfer expenses like
brokerage, commission (if any)
Here no expenses were done
The sale price of the house Rs 40,00,000
Less: Indexed cost of purchase =
Purchase price*cost index of 2006
(117)/cost index of FY 2016 (254)
Rs 31,95,000
Net Sale Consideration Rs 40,00,000
How to Use a Calculator for Capital Gains?
There are many online tools that can be used to calculate capital gains tax. To run
the calculations, you must enter the information below: -
 The cost of the property's sale
 The cost of purchasing the property
 Purchase date, including the month and year
 The sale's day, month, and year.
 Information on investments made with capital gains, such as shares, debt
funds, equity funds, gold, fixed maturity plans, etc.
After that, in order to determine capital gains for a financial year, you must give the
following information: -
 Mutual funds, equities, bonds, cash & cash equivalents, Exchange Traded
Funds (ETFs), and Fixed Deposits are all examples of investment vehicles.
 Gain category Long-term or short-term
 The year of purchase's Cost Inflation Index (CII).
 The year of sale's Cost Inflation Index (CII).
 Capital gain without indexation over the long term.
 Capital gain over the long-term using indexation.
 The price difference between buying and selling a property.
 The interval between the purchase price and selling of the property
 Bought-in index price

8. The Effect of Cost Inflation Index on Capital Gains
Due to inflation, money's worth is always declining. The cost price of a property in
India may be indexed to account for price increases brought on by inflation. Every
financial year, the Reserve Bank of India updates the cost inflation index. The table
below displays the Cost Inflation Index for the years 2001–2002:
Financial Year Cost Inflation Index
2021-22 317
2020-21 301
2019-20 289
2018-19 280
2017-18 272
2016-17 264
2015-16 254
2014-15 240
2013-14 220
2012-13 20
2011-12 184
2010-11 167
2009-10 148
2008-09 137
2007-08 129
2006-07 122
2005-06 117
2004-05 113
2003-04 109
2002-03 105
2001-02 100
Are There Any Deductions to Lower Capital Gains Tax?
Nirmala Sitharaman, the finance minister, imposed a maximum of Rs. 10 crores for
the long-term capital gain tax exemption in the Union Budget 2023. Under Sections
54 and 54F of the Income Tax Act, the deduction has been imposed for reinvestment
in residential buildings.
The Income Tax Act permits asset owners to lower their capital gains tax. Let's
examine the following:

9. Section 54F: Your full capital gain tax will be excluded if you use 100% of the
proceeds from selling a house or piece of land to build a new home. There are a few
restrictions placed on it, though.
Section 54EC: The tax obligation may be diminished if Long Term Capital Gains
from the sale of land are utilised to purchase Capital Gain Bonds. Additionally, you
can take advantage of tax deductions by depositing such taxes in the bank under the
Capital Gains Account Scheme. Within six months of selling the property, the money
should be put in capital bonds, which offer annual interest rates of 5–6%. Capital
bonds have a five-year lock-in period before being automatically redeemed.
Things to keep in mind
 Capital bonds cannot be sold or transferred to anyone in order to avoid
paying capital gains tax.
 Bonds of capital are secure. They received a AAA grade from credit rating
agencies like CRISIL.
 You can invest in NHAI or REC bonds, which are sold by banks.
 Capital Gains Deposit Scheme: Using the taxable amount to pay for a home
or construction is another strategy to lower capital gains tax. But before
submitting a tax return, it ought to be finished. The unused sum should be
deposited with a bank under the Capital Gains Accounts Scheme if it is not
done. You can temporarily relax and park capital gains safely for a while by
investing in them. You are eligible for tax exemptions if you have parked your
capital gains account at one of the recognized banks. The money must,
however, stay in the bank for three years; otherwise, the deposit would be
considered a capital gain, and the tax will need to be paid in the next fiscal
year.
What is the bond capital gains tax?
Within six months of the sale of the property, people may invest in certain bonds,
such as those issued by Rural Electrification Ltd. and the National Highway
Authority of India, in accordance with Section 54EC of the IT Act. Capital gains
cannot be redeemed before three years. The buyer of the bond receives a
guaranteed interest rate. In a fiscal year, a person may invest up to Rs. 50 lakhs in
capital gain bonds. Additionally, only long-term capital bonds are eligible for the
benefit.

10. Case 1: Property Sale of a House
The following costs are subtracted from the overall sale price:
 Brokerage or commission fees are paid to locate the buyer.
 Stamp paper cost
 Expenses connected with travel and transfers.
 Expenses related to real estate inheritance, such as those incurred during the
process of creating a will and succession certification. In some circumstances,
it also includes the executor's fees.
Case 2: Shares Are Sold
 What you need to know about share sale-related deductions is provided here.
 Brokerage fees associated with selling shares
 It is not possible to deduct the Securities Transaction Tax (STT) as a cost.
Impact of Capital Gains Tax on NRI
You will also be responsible for paying capital gains taxes if an NRI owns real estate
in India. Tax is imposed in accordance with the two categories into which capital
gains are divided. Short-term capital gains are those made on properties owned for
less than two years; long-term capital gains are those made on properties held for
more than two years.
 Short-term capital gains are subject to taxation under the NRI income tax slab
rates, which are determined by the total income taxable in India.
 The tax rate on long-term capital gains is 20%.
 Buyers must withhold 20% tax deductible at source (TDS), which is enhanced
to 30% in cases of long-term capital gains.
 Under Section 54, an NRI may be exempt from paying capital gains tax. If the
capital gain is long-term, only then is the exemption available. Either one year
before or two years after the sale of the older property, you must purchase
the new property. In other words, it ought to be a transient capital gain. You
might also invest that money in the construction of new homes. However, the
construction project should be completed in three years.

11. How Can You Save Money on Capital Gains Taxes?
If you wish to evade paying capital gains tax, try some of the following:
 The transaction's gains can be used to buy a new home without subjecting
you to tax. You must, however, purchase a new residence before submitting
your income tax return for that particular year.
 Additionally, you can place your long-term capital gains in three-year bonds
issued by the National Highways Authority of India and the Rural
Electrification Corporation Limited. Please take note that the maximum
amount you can invest in these bonds in a fiscal year is Rs. 50 lakhs.
 You can still avoid paying tax on the capital gains even if you don't
immediately want to buy another piece of real estate. All you have to do to
retain the money there for two to three years is deposit the proceeds in any
public sector bank under the Capital proceeds Accounts Scheme (CGAS). To
avoid having the money considered a capital gain and having to pay tax on it,
you must invest the money in a property by the end of the time frame. If you
choose to invest in a ready-made property, you have two years to complete
the transaction; but, if you choose a property that is still under construction,
you have three years.
 If the developer of the new property does not deliver the property within
three years of the purchase, your tax will be exempt.
 To determine capital gains, stamp duty & registration fees are taken into
account.
Investing in long-term equities can also help you avoid paying capital gains tax. Your
tax obligation will be at its lowest if you purchase high-quality equities from
successful companies and hold them for an extended period of time. Finding
organisations that perform regularly and sticking with them for a long time is
difficult, though. Due to the potential for long-term operating changes, you might
eventually need to sell the share.
In addition, you can lower your capital gains tax by comparing your most recent
capital losses to your capital gains. According to India's income tax laws, anyone
who has capital losses from earlier years may use those losses as a credit against
their capital gains to reduce their tax liability. It must be emphasized that only long-
term capital losses may be offset by long-term capital gains. The same holds true for
short-term capital losses, which can only be offset by short-term capital gains.
Additionally, the capital loss may be carried over for an additional eight years.

12. Implications of TDS
TDS must be withheld when purchasing a property that costs more than Rs. 50
lakhs. Subtract 1% of the property's worth as TDS before paying the seller's
payment.
What Are Some Ways to Lower Capital Gain Tax on My House?
Simply by residing in your home for more than two years, you can easily lower the
capital gain tax amount or avoid paying the same on it. All you need to do is keep
track of every dollar you spend on renovations or home upgrades. You can deduct
the cost of these improvements from the price of your home, which will help you
lower your overall taxable capital gain amount.
Tax on Agricultural Land's Capital Gains
Agribusiness profits from sales of land can either be completely exempt from
taxation or subject to capital gains taxation. Let's examine the conditions under
which the proceeds from the sale of agricultural land are taxed.
 According to the Income Tax Act, no income tax is assessed on the sale of
agricultural land. Income from agricultural activities is any revenue derived
from agricultural land.
 Agricultural land that is acquired and sold as stock-in-trade in the course of a
business is taxable under the heading Business and Profession.
 According to Section 10(37) of the Income Tax Act, any capital gains from the
government's forced acquisition for urbanisation or any other reason are
excluded.
If the land was not sold for any of the aforementioned reasons, one may also make a
claim for an exemption under Section 54B.

13. Conclusion: How to Calculate Property Capital Gains Tax?
The capital loss must have been highlighted and stated in preceding years' income
tax returns. Getting money gains is now simple because to the market's abundance
of investing possibilities. Additionally, if you reinvest wisely, the capital gains tax
might be decreased, resulting in significant savings.
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