Period of holding properties to determine Capital Gain Tax in India

Hello My NRI friends,

Do you own a property, say House, plot or a flat in India? In case you hold one and decide to sell such property, you are subject to Capital Gain Tax.

How much taxes are to be paid? It depends on the period of holding of the asset. If a flat was purchased in 2017 and is decided to be sold in 2018 (the period of holding is less than 24 months), then the base tax rate is 30%

In case the period of holding is over 24 months, then you are eligible for a concessional rate of tax, at 20%.

Some of you would have read about this in the past and may get a doubt, whether it is 24 months or 36 months, right?

Till 31st March 2017, the period of holding was 36 months to avail concessional rate of tax. The Government, through the Union budget of 2017 amended the Section 2(42A) of Income Tax Act and the amended Section reads as under-

[“short-term capital asset” means a capital asset held by an assessee for not more than  [thirty-six] months immediately preceding the date of its transfer]

…………………………….

[Provided also that in the case of a share of a company (not being a share listed in a recognised stock exchange in India), [or an immovable property, being land or building or both,] the provisions of this clause shall have effect as if for the words “thirty-six months”, the words “twenty-four months” had been substituted.]

So friends, if you hold a property for a period of over 24 months, it will be classified as Long Term Capital Asset and any gain arising on sale of such property is subject to 20% tax.

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 25+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional and Registered Valuer (F&SA).Prasad welcomes your comments and questions. Please email him at [email protected]

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