We bought land in 2016, which we wish to sell because of a family emergency. Will we need to pay capital gains on the sale?
Rasika Bhatia, Chandigarh
As you are selling the land before completion of two years of holding it, there will be capital gains that you will have to pay and there is no way to avoid it. The gains will be long term capital gains chargeable at 20 per cent with indexation benefit and you will be liable to pay tax at 20 per cent on the excess of sale consideration over the indexed cost.
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If you don’t need the money from the sale, you could claim exemption from payment of capital gains tax under Section 54F by investing the sale proceeds of plot of land for purchasing new residential property or under Section 54EC by investing the capital gains in infrastructure bonds.
