May 2023

Title: A Quick Guide to Long-Term Capital Gains Taxation from Sale of Land in India

Long-Term Capital Gains (LTCG): Capital gains from the sale of land are considered long-term if held for over 24 months. LTCG is calculated as the difference between the sale price and the original purchase price, adjusted for inflation using the Cost Inflation Index (CII).

Taxation on LTCG: LTCG from the sale of land is taxed at 20% plus cess and surcharge, levied on the indexed capital gain, which accounts for inflation.

Exemptions and Deductions:

a. Section 54F: Exemption if capital gains are reinvested in a residential property in India within specified time limits.

b. Section 54EC: Tax savings by investing capital gains in specified bonds issued by NHAI or REC within six months of the sale.

c. Capital Gains Account Scheme (CGAS): Deposit unutilized capital gains in a CGAS account to claim exemptions.

TDS Deduction on Sale of Land: TDS at 1% must be deducted by the buyer if the transaction value exceeds INR 50 lakhs (different rates apply for NRIs).

Information Reporting to the Income Tax Department: Land transactions with sale consideration over INR 30,00,000 must be reported to the Income Tax Department by the registrar of properties.

Conclusion: Understanding LTCG taxation rules and available exemptions can help minimize tax liability and optimize financial planning. Consult a tax professional for personalized advice.

CA Tomy Veerath & CA Alex V John

"Disclaimer: The information provided on this blog is for educational purposes only and is not intended as professional advice. We cannot be held responsible for any consequences that may arise from implementing the information without proper consultation. It is important to seek professional advice tailored to your specific circumstances before making any decisions or taking any action based on the content of this blog."