I sold my house for Rs 60 lakh a month ago. Do I have to show this income as capital gains? If yes, what is the amount to be invested in it?
Russel D’Souza, Goa
Congratulations on the sale and the profit you made from it. For taxation purpose, profit from sale of house property is taxable under the head of capital gains. In case you sold your house within three years of its purchase, the gain made on its sale shall be termed as a short term capital gain and taxed at normal rates applicable to an individual.
In case you owned the house for more than three years, the profit on sale of property shall be long-term capital gain. For calculating the long-term capital gain, the cost of the house property is indexed as per the cost inflation indices as declared by the government. Long-term capital gain is taxed at a flat rate of 20 per cent irrespective of the income slab. In case of long-term gains tax, you also have the option of investing the amount of gain in another residential property, or in tax-saving bonds to avoid paying capital gains tax. The amount of tax will depend on the classification of gain, purchase cost and your income slab.
