Property Gain Tax- Some facts
Consumers looking at taking the benefit of the government’s emphasis on the real estate sector, especially the housing sector, need to be aware of the tax implications. These tax implications are related to the sale-purchase of properties particularly when the sale-purchase agreements and their executions are spread over several days/months or even years.
The citizens should be aware that property is regarded as a capital asset and any gains arising from the sale of property are assessed under the head “capital gains” according to the Income-Tax Act, 1961. The tax varies, depending on the time period the property was held on to.
Irrespective of how the property has been acquired, the revenue authorities scan through every real estate transaction and go strictly as per the rule book and levy tax. Hence home buyers and sellers need to beware of these norms to come under the scanner of the IT department.
They consider profit generated by property sale as regular income for that year and apply tax accordingly. However if the entire amount earned from the sale of a property is used to buy another property within a year, then it is not considered as an income and an individual needs not pay any property gain tax.
However, there are instances where assessees don’t intend to avoid paying taxes but situations are beyond their control. There is a slight ambiguity in such situations and the Supreme Court has directed the IT department to go case by case in such situations.
Source- The Financial Express
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