What is the capital gain tax rate on land sale in India and how can I save on this tax?

Question

My inquiry pertains to India only. The answer must relate to Current Indian Tax Laws.
I bought a piece of land about 4 yrs ago and am planning to sell it. I am expecting decent profit on this sale. I want to know about the current capital gains tax rates. I believe there is a provision for lower capital gains tax rates if benefit of indexation is not utilised. I also want to know about where I can invest my capital gain (together with interest rates and lock-in periods) to enable me to save on capital gains tax.

Answer 1

The tax rate on long term capital gains other than listed securities or units is 20%. Thus , in your case , it will be 20% .

Explanation ot Section 112 of the I T Act makes it clear that ONLY securities or units have the benefit of option regarding indexation i.e 10% on LTCG without indexation or 20% with indexation.

Please read the Explanation to Section 112
"Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities or unit or zero coupon bond, exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee."
As far as saving on LTCG is concerned , you can take the benefit of Section 54EC by investing whole of LTCG in bonds issued by either by the National Bank for Agriculture and Rural Development or

National Highways Authority of India Rural or Electrification Corporation Limited,or
National Housing Bank,or
Small Industries Development Bank of India ,

within SIX months from the date of transfer .

You can also take the benefit of Section 54F of the I TAct for saving tax on long term capital gain tax by investing the Sale Value of the long term capital asset in any residential house within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house .

Remember this benefit is not available to you in following cases
i) You own more than one residential house, other than the new asset, on the date of transfer of the original asset; or

(ii) You purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or

(iii) You constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and

Answer 2

If u sold the land it will attract as a Long Term Capital Gain and the rate of Tax was 20%.

U can claim as a exception u/s 54EC suppose if u invest the portion of capital gain with in six months from the date of transfer in notified bonds-NABARD,National Highway Authority of India(NHAI),Rural Electrification Corporation Ltd(RECL),National Housing Bank(NHB),Small Industrial Development Bank of India(SIDBI).Such investment will not be eligible for deduction u/s 80C since ur claiming as a deduction in this Section

U should not sale such purchase of above mentioned purchase for 3yrs from the date of purchase.

Answer 3

The above answer is good. The interest rate on the bonds will be around 7% to 8%.

My advise is not to sell the land. It will still apriciate further. But be careful to safeguard the same from others.

Answer 4

You for sure have an quite VERY constrained expertise people Tax regulation. Mine isn't quite huge yet i'm able to declare with actuality that anybody (different than in very constrained situations) who had earnings "according to merchandising something for a earnings" as oftentimes as you traded your "skills/hard artwork for wages" could be paying the comparable tax expenses as you. short-term "capital advantageous properties" are taxed purely such as you salary earnings. the version is "payroll taxes". anyone who's self-employed will pay much greater of that than you. Why are dividends taxed at a decrease fee? considering dividend grew to become into additionally taxed as earnings while the employer paying the dividend grew to become into taxed. you are able to or would possibly no longer ought to pay capital advantageous properties on your place once you sell it reckoning on what and once you do something with the proceeds. long-term capital advantageous properties are taxed decrease with the aid of fact it particularly is known that the decrease fee could tend it inspire investment. there is not any "disparity" in this element of the tax regulation. EDIT: short term capital advantageous properties are actually not taxed as ordinary earnings? clarify please. Or please clarify the place the "diagnosis" is misguided. you're making use of very imprecise words. "merchandising something for a earnings" isn't precisely particular. "Why am I charged a greater physically powerful tax fee for doing easily artwork, than i could be for purely merchandising something at a earnings?" you are able to and you is probably no longer "charged" a greater physically powerful fee. You maximum easily pay payroll taxes that a "broker" could or is probably no longer concern to.