Wednesday , July 17 2024

Wealth Tax Rules: Will income tax be paid on selling gifted property? Know what the rules say

Gifted Property Sales Tax Rules in India: In India, the practice of gifting property (land and house) has been passed down from generation to generation. People gift property to their children, relatives and friends during auspicious or auspicious events. In India, the rules and regulations regarding property are very strict and along with stamp duty, many types of taxes are also collected by the government on its purchase and sale.

In such a situation, the question arises in the minds of many people whether the property received as a gift is taxable.

What is the tax rule on sale of property received as a gift?

If a taxpayer has received immovable property like house and land from parents or any other relative during the financial year without paying any amount and stamp duty on the same exceeds Rs 50,000, then no tax on holding such gift property is payable. Tax is not levied. There is no tax.

Whereas if any such property is sold. Then capital gains tax is imposed on it. If the asset is held for more than 24 months, it will attract long term capital gains tax. Short term capital gains tax is applicable if the period is less than this.

How is capital gains tax calculated on property received as a gift?

If an asset such as land or house has been received as a gift, its holding period will be calculated from the time the person making the gift purchased the asset.

For example, if a property purchased in 1990 is gifted in 2022 and is being sold in 2023. In this situation, long term capital gains tax will be levied on him and it will be calculated from 1990 onwards. Additionally, if a property purchased in 2022 is gifted in 2023 and the property is sold in the same year, it will attract short term capital gains tax. ,

Long term capital gains are always calculated on the basis of net sales income. From this the cost of acquiring the house or land and the cost of improving the house are deducted.

How much is the capital gains tax?

If the holding period of a property is more than 24 months then long term capital gains tax is levied on it. Capital gains tax on property is 20 per cent including surcharge and cess. In this the rules of indexation are followed.

If the holding period of the asset is less than 24 months, short-term capital gains tax will be charged on it as per the income tax slab of the taxpayer. This means that if a person gets short-term income from the property then it will be added to his income and taxed on it.