look news india
When you sell property, land or any other asset (like gold or shares) purchased with your hard-earned money, the government collects tax on the profit made from it. In financial language it is Capital Gains Tax It is said. Many times this tax is so high that a large part of your profit goes into the government’s account.
But there is no need to panic, some very wonderful provisions have been made in the Indian Income Tax Act, 1961 to provide relief to the taxpayers. If you know about these government exemptions before calculating tax, you can legally save lakhs of rupees. Let us understand according to experts which are those sections which can save you from losing your pocket.
4 main streams to save capital gains tax: at a glance
The table given below is the easiest way to understand the exemptions available under income tax rules. Through this you can understand which rule fits your case:
Things to keep in mind when using these sections
1. Section 54: Buying a new house by selling the old house
If you are selling your old flat or house and buying a new house, you can get full exemption on Long Term Capital Gains (LTCG) under this section. According to the rules of the budget, a maximum limit of Rs 10 crore has been fixed.
2. Section 54B: Relief for farmers and agricultural land
This is the only section which is available on both long term and short term capital gains. If you sell agricultural land and buy another agricultural land within two years, then you do not have to pay any tax on it.
3. Section 54EC: A way to save tax without buying a new house
If you are selling a property but don’t want to buy a new house or land, you can save tax by investing in special government infrastructure bonds (like NHAI or REC).
-
Condition: After investing in these bonds you will get for at least 5 years Have to keep with you (lock-in period). You cannot redeem them prematurely.
4. Section 54F: Buying a house by selling gold or shares
If you have sold your family gold or old shares, not your property, and use the entire net consideration to buy a new house, then you get huge tax relief under this section. If you do not invest the entire money, then the rebate is available in the same proportion as the money you have invested in the new house.
Useful information: What is CGAS (Capital Gains Account Scheme)?
It often happens that our property is sold but it takes time to find or build a new house. In such a situation, you will have to deposit that profit in the bank before the last date of filing Income Tax Return (ITR). CGAS (Capital Gains Account Scheme) Has to be deposited in the account. By doing this, the government assumes that you will use this money only for the house and you get the benefit of tax exemption within the time limit.
By using these rules at the right time and in the right manner, you can completely save your hard-earned money from getting lost in taxes. Before selling any asset, be sure to discuss the legal documents in these sections with your financial advisor.
