Form 1125 A December 2010: Fill & Download for Free

Capital Gains Tax on Property: Short term, Long term, calculatorCapital Gains TaxProperty held for 2 years or more to qualify as long term assetTax Treatment Holding period criteria FY2017-18 onwards Holding period criteria upto FY2016-17 Tax RateShort terms capital gains Less than 2 years after registry or issue of OC, whichever is later Less than 3 years after registry or issue of OC, whichever is later Marginal tax rate – (upto 30%), 3% cess and upto 15% surchargeLong Term Capital Gains 2 years or more 3 years or more 20% with indexation benefit and 10% without indexation ebenfit Exemptions available if proceeds invested in residential house or Section 54EC bonds. Indexation benchmark changed to 2001 from 1981-82 effective 2017-18Income Tax SlabsCapital gains tax on sale of propertyAre you a property owner? Looking forward to sell your old property? In case you sell your property at a price higher than its purchase price, then you would be liable to pay capital gains tax on the profit you earn on the sale of your property.For instance, if you bought a house/ land 20 years ago and you wish to sell it now, it can be expected to fetch significant appreciation to its purchase value. This indicates that you have earned "Capital Gains" on your property and hence, are liable to pay tax on these gains. The rate at which your capital gains will be taxed depends on the tenure for which you held the property and will be accordingly classified as Short Term Capital Gain or Long Term Capital Gain.Short Term Capital Gains TaxShort Term Capital Gain on property is considered as a gain from selling a property which was held by you for less than 36 months. As a taxpayer, you are liable to pay tax on short term capital gain on property as per your applicable marginal income tax slab.Some key points to remember:You are allowed to adjust/ reduce your sale consideration for any brokerage, commission you had paid at the time of property saleYou are allowed to deduct any expenditure on construction and home improvement incurred during the period you held/owned the assetBenefit of indexation, i.e. adjustment for Inflation is not allowed on a property transaction classified under short term capital gainNo exemption or savings is allowed on short term capital gain tax u/s 54 i.e. by re-investment in property or buying capital gains bond issued by REC or NHAILiability under Short Term Capital Gains can be significantly high, if you fall in the higher income tax slab. It is advisable to plan to sell the sale of your property after 3 years of holding, so as to shift it to the category of Long Term Capital GainsShort Term Capital Gain Tax CalculatorIllustration of Short Term Capital Gains: Mr A sold his property January 2016 at Rs. 50 lakh, which he had purchased in December 2014 for Rs. 30 lakh. As per his income, Mr. A falls in the highest tax slab of 30%. Mr. A spent around Rs. 2 lakh on house improvement during the period and also paid a brokerage of 0.5 per cent of the sale price of the house at the time of selling the house. What will be his taxable capital gains and what is the tax amount payable by him?In this illustration, the gain achieved on this property in its 2 year holding period will be considered as short term capital gain and will be taxed as short term capital gains tax, as per his applicable income tax slab. In this case, as shown below, Mr. A's short term capital gains will be Rs. 17.75 lakhs and he is liable to pay a tax of Rs. 5,32,500 on this.This has been explained in the table below:Particulars Amount in RupeesSale price of the house 5,000,000Less: Any transfer expenses such as brokerage, commission etc 25,000Net Sale Consideration 4,975,000Less: Purchase Price of the house 3,000,000Less: House improvement costs 200,000Gross Short Term Capital Gain 1,775,000Less: Any exemptions available under sections 54, 54B, 54D, 54EC, 54ED, 54F, 54G NilNet Short Term Capital Gain 1,775,000Short Term Capital Gain Tax Liability for Mr. A (at his marginal tax rate slab of 30%) 532,500Long Term Capital Gain TaxWhen you sell your property that is owned by you for more than three years, any gain arising from such sale will be considered as long term capital gain. Long term capital gain is calculated as the difference between net sales consideration and indexed cost of property. The benefit of indexation is allowed to set off the impact of inflation from the gains made on sale of the property so that the actual gains on property will be taxed. This is based on the logic that value of money decreases constantly because of inflation and hence, it is unfair to tax a long term property holder for the nominal gains accruing to him only because of inflation.Key points to remember:Current Long Term Capital Gains tax rate is 20%You are allowed to adjust your sale consideration for any brokerage, commission you had paid at the time of property saleYou are allowed to deduct any expenditure on construction and home improvement incurred during the period you held/owned the asset. Similar to the indexation benefit available on the purchase price, any house improvement expenditure is also allowed to be adjusted as per the Cost Inflation Index published by Reserve Bank of India.You can get your loan term capital gains tax reduced/exempted u/s 54 i.e. by investing the gain in residential property or buying capital gains bonds issued by REC or NHAI.Cost Inflation Index and its Impact on Capital GainsThe value of money decreases constantly because of inflation. Thus, income tax department in India allows indexing the cost price of property, so as it to adjust it for inflation related price appreciation. The cost inflation index is upgraded by Reserve Bank of India in every financial year. The table below captures the Cost Inflation Index since its base year 1981-82 (Base Year = 100)FINANCIAL YEAR COST INFLATION INDEX FINANCIAL YEAR COST INFLATION INDEX2017-18 - 2016-17 11252015-16 1081 2014-15 10242013-14 939 2012-13 8522011-12 785 2010-11 7112009-10 632 2008-09 5822007-08 551 2006-07 5192005-06 497 2004-2005 4802003-2004 463 2002-2003 4472001-2002 426 2000-2001 4061999-2000 389 1998-1999 3511997-1998 331 1996-1997 3051995-1996 281 1994-1995 2591993-1994 244 1992-1993 2231991-1992 199 1990-1991 1821989-1990 172 1988-1989 1611987-1988 150 1986-1987 1401985-1986 133 1984-1985 1251983-1984 116 1982-1983 1091981-1982 100Long term Capital Gain CalculatorIllustration: Mr A sold his property in January 2016 at Rs. 50 lakh, which he had purchased in December 2011 at Rs. 30 lakh. As per his income, Mr. A falls in the 30% marginal tax rate slab. Mr. A spent around Rs 2 lakh on house improvement in January 2013 and also paid a brokerage of 0.5 per cent of the sale price of the house at the time of selling the house. What will be his taxable Capital Gains and what is the tax amount payable by him?In the above illustration, the buyer held the property for more than three years and hence, the gain earned on selling this property will be considered as long term capital gain. The long term capital gain will be taxed at the rate of 20 %.Mr A will be liable to pay a tax of Rs 1,18,007 on his Long Term Capital Gains of Rs 5,90,034 on this property transaction.The calculation for long term capital gain with indexation benefits has been explained in the table below:Particulars Amount in RupeesSale price of the house 5,000,000Less: Any transfer expenses such as brokerage, commission etc 25,000Net Sale Consideration 4,975,000Less: Indexed acquisition cost of the house (Purchase Price in FY12 adjusted to FY16 Cost Index) i.e. Rs 30 Lakh * Cost Index of FY16 (1081)/Cost Index of FY12 (785) 4,131,210Less: Indexed house improvement costs ( Home Improvement Expenditure in FY13 adjusted to FY16 Cost Index) i.e. Rs 2 Lakh * Cost Index of FY16 (1081)/Cost Index of FY12 (852) 253,756Gross Long Term Capital Gain 590,034How to save tax on long term capital gains?A property is a wealth which is created over a life and typically, is sold to amplify your existing wealth which justifies levying a tax on it. Also, tax from capital gains directly affects investment motives. Indian Income tax rules, however, contain provisions, that in a few scenarios exempt tax from paying long term capital gains tax.1. Under section 54, sell a residential property and invest the gains to buy a new residential property and claim exemption on capital gains tax.Under section 54, you can claim exemption on capital gains tax exemption, if you invest full or part of your sale proceeds of a residential property in India in another residential property in India. Rules for exemption are as follows:Exemption is available to individuals and HUFs and is available for one residential propertyThe capital gains from sale of a residential property can be set off against the purchase of new residential house. The property sold and purchase should be in IndiaThe new residential house can be bought either one year before the sale of old house or within two years from the date of sale of the previous property. In case you plan to construct a house, the construction of the house should be completed within 3 years from the date of sale of the previous propertyOnce you have purchased or constructed a new house, you cannot sell it in less than 3 years. If you sell it before 3 years, you will not get the benefit of capital gain exemption and your sale proceeds will be taxable. These 3 years are calculated from the date of acquisition or completion of work of the new house.The amount of exemption claimed is lower than the amount of capital gains or the cost of new house purchased.2.Under section 54 F, sell any asset other than a residential property and claim capital gains tax exemption by purchasing a residential houseRules for exemption under Section 54 F are as follows:Exemption available to individuals and HUFsThe new residential house can be bought either one year before the sale of old house or within two years from the date of sale of the previous property. In case of construction of a house, the construction of the house should be completed within 3 years from the date of sale of the previous assetExemption available only if the taxpayer does not own more than one residential house on the date of transfer of such asset other than the one that he has bought to claim deduction under Section 54 FIf the whole sale consideration is not invested and only a part sale consideration is invested in the purchase of new property, the amount of exemption shall be provided proportionately i.e. Amount Exempt= Capital Gain X Amount Invested/Net Sale Consideration3.Under Section 54 EC, sell a long term capital asset and get capital gains tax exemption by investing in 54EC Capital Gain BondsThis section comes in handy for tax payers who have sold their assets and are liable to pay long term capital gains tax, but are unable to take benefit from the rules under section 54 by buying another residential property. These tax payers can save tax by investing their gain in Capital Gains bonds. Rules for exemption are as follows:You have to invest the "capital gained" money into these bonds within six months of selling your propertyThe money invested into these bonds will be exempted from the capital gain taxTDS is not applicable on money invested in capital bonds. However, interest income from capital gains bonds is taxable. The tenure of capital gains bonds is 3 years and the redemption is automatic. You will not get any interest after 3 yearsYou are not allowed to withdraw your money invested in Capital Gains Bonds before 3 years from the date of investmentThe face Value of bond is 10,000 and you need to invest a minimum of Rs 20,000 in these bondsThese bonds are usually issued by REC and NHAI with an interest rate of 6%These bonds can be held in either demat or physical formThese bonds cannot be pledged as collateral for obtaining loans4.Park your capital gains amount in capital gains account in case you are unable to purchase a property before your Income Tax filing dateCapital gains account scheme is available as a temporary method to save capital gains tax. This scheme is for people who are unable to invest in a new property before filing the income tax return. The scheme was introduced in 1988 and under the scheme, a capital gains account may be opened only with specified banks or institutions. The taxpayer can put his gain on his asset transaction in this account for three years. He can withdraw the amount invested for purchasing or constructing his new house, as he takes the decision to do so within the next three years. Features of the scheme are as follows:The taxpayer should mention that he has opted for the scheme in his Income Tax ReturnYou can make the deposit anytime in installment or lump sum before the due date of filing income tax returnTwo types of accounts will be opened under this scheme. One account will enable you to withdraw money as per your requirements and other account will be like a fixed depositMoney withdrawn from any account has to be used within 2 months for specified use to avail capital gains exemptionThe deposited amount in this scheme can't be used as mortgage for any loanThe interest on capital gains account is taxable. TDS will be deducted as per rules5.Set off your capital gains against any capital loss carried forward from previous yearsIncome Tax Act in India allows that if a tax payer has any capital loss that have incurred earlier and carried forward, he can set off his capital gains against those losses and hence reduce his tax liability. Some key points to remember are:Short term capital gains can be set off against short term capital loss and long term capital gain can be set off against long term capital loss onlyThe capital loss can be carry forward for a period of 8 yearsThe capital loss carried forward should have been mentioned in income tax returns.

Mobile Phones have become inherent part of our lives. Smartphones have revolutionized the way people use mobiles today. Consumer preferences are dynamically changing and hence it's a world of latest style and innovation for these top mobile brands. High resolution cameras, quicker processors, stylish look, design, new options, style etc are what the consumer needs, and the top phone brands and new rising mobile companies are exploiting these options to differentiate from their competitors.The list of top mobile brands includes Apple, Samsung, Huawei, Vivo, Oppo, LG followed by ZTE, Alcatel and Lenovo. The leading global mobile phone brands comprise of leading players which have a strong global presence. Customers have a wide range of handsets to choose from the various offerings from the biggest mobile phone brands. Here is the list of the top 10 mobile brands in the world in 2019.Top Mobile Phone Brands Ranking with Parameters (Shipment, Sales, Profit):10. Alcatel-LucentEstablished in 2004, Alcatel-Lucent is French based smartphone organization, having a strong global name in top mobile brands.In 2006 Alcatel was merged to US based company Lucent to form Alcatel-Lucent enterprise. This merger was done as both the companies were confronting extreme rivalry in the telecommunications industry, and looking back, it has worked in favor of the companies.In 2016 Alcatel-Lucent was acquired by Nokia mobile company but still it carries the name Alcatel-Lucent enterprise. This acquisition was done to make it a strong contender to the opponent firms like Sony Ericsson and Huawei, whom Nokia and Alcatel-Lucent had outperformed in terms of total income in 2014. The flagship product of Alcatel-Lucent is OneTouch series. Alcatel-Lucent has international presence in 170 countries, which shows why it deserves to be a part of the top global mobile brands worldwide. The company has a robust client base attributable to its specialization in technological innovation and additionally offers its customers with custom-made solutions for their specific desires. Alcatel-Lucent shipments are around 50 million units during a year. The premium brands of Alcatel-Lucent are Pixi, Idol and Pop ranges. The company recently launched A50, A30 plus, Idol 5S, Pop 4 plus smartphone mobiles. Alcatel-Lucent has been able to incorporate virtual reality in their Idol 4 and Idol 4s series. Alcatel-Lucent had a market share of 1.3% in 2017. Alcatel is 10th in the list of top mobile brands 2018.Units Shipped (Million) : 20Profit (in million $): 218Sales (in million $): 15,1499. ZTETelecommunications equipment and mobile manufacturing brand ZTE from China is a leading smartphone company.ZTE is one of the global leaders in making smartphones, feature mobile phones, tablets etc apart from telecommunication and network equipment. More than 70,000 people are employed with the ZTE company which has a very strong worldwide presence owing to its diverse range of mobile phones and strong distribution network. The mobile phones made by ZTE are also sold with the name OEM in different parts of the world. ZTE company has subsidiaries named ZTEsoft, Zonergy and Nubia Technology which are all involved in telecom equipments and peripherals. With extensive distribution and strong marketing, ZTE has its business spread in 140 countries. Such a strong presence and good revenues show why ZTE is one of the top global mobile phone brands in the world market. ZTE Axon M launched in 2017, is an all-packed smartphone with all features to compete with the best smartphone brands. ZTE is 9th in the list of top mobile brands 2018.Units Shipped (Million) : 45Profit (in million $): 719Sales (in million $): 171238. LenovoLenovo is Chinese multinational company and is the world's prime laptop manufacturer.Lenovo was founded in the capital of China in 1984 and it entered the mobile industry in 2012. Over the years, Lenovo has worldwide presence in around 160 countries, and has grown to become one of the top global mobile companies. Some of the popular smartphones of Lenovo are P Series, K Series, Zuk Series, A Series and VIBE. Lenovo launched the Moto Z models which reinforces its philosophy of “Different is better”. Lenovo will be launching Tango handset that can be altered to video projectors or speakers. For developers, Lenovo released a smartphone-based program which can incorporate handsets with services hosted in the web cloud. Lenovo launched ZUK Z1 to provide a whole package of power pack performance and user-friendly experience and it has Cyanogen operating system that permits customization of the user interface. Lenovo India sells its mobiles and accessories largely through flash sales in India. Lenovo’s Tango models have sensors which can track motions and measure the contours of rooms; also it can map interiors of the buildings. Lenovo has raised the competition among its peers by using augmented reality and advanced innovation. Lenovo is 8th in the list of top mobile brands 2018.Units Shipped (Million) : 50Profit (in million $): 535Sales (in million $): 43,0357. LGFounded in 1958 LG is South Korean Electronics Company having a strong global presence.LG’s premium mobile brands embody the G-Series, the K-Series, LG Tribute, the LG G Flex and also the LG Nexus. LG sells nearly sixty million units a year, making it one of the most popular and high volume-driven mobile companies in the world. In 2016, LG shipped 12 million units of smartphones. In 2017, LG Electronics’ revenue totaled at 57.71 billion U.S. dollars. LG Electronics (LG) is anticipated to launch the 2018 edition of its premium flagship smartphones K8 and K10 at MWC 2018 which is set to roll out worldwide in countries like Europe, Asia, Latin America and the Middle East. These smartphones have advanced camera features such as high speed auto focus and noise reduction for better low-light photography. K-Series mobile range continues to deliver exceptional smartphones to customers at exceptional prices. LG Electronics will roll out smartphones with AI technologies at MWC 2018. The new technology is going to be embedded in the 2018 version of the LG V30 model which will be LG’s most advanced smartphone till date. LG is 7th in the list of top mobile brands 2018.Units Shipped (Million) : 55Profit (in million $): 110Sales (in million $): 468006. XiaomiXiaomi is one in all the quickest growing smartphone company in the world that manufactures smartphones, mobile apps, laptops.Xiaomi was founded in 2010 by Lei Jun, and released its first smartphone in 2011, and since then Xiaomi has become the 8th largest smartphone manufacturer in the world. Xiaomi’s flagship brands are the Redmi and Mi series, which have grown significantly in popularity. Xiaomi has been able to create brand value owing to its focus on continuous innovation in technology. It also has been able to gain large market share due to its extensive advertising and marketing strategies especially in India and China to boost its sales of smartphones. With a consistent growth, Xiaomi is competing with the top global mobile brands in the world. In March 2018 Xiaomi launched Mi MIX 2S. Xiaomi’s MIUI 9 has in-built feature that allows users to do advanced customization. The company has been able to mark its presence in markets of India, China, Brazil, Singapore, Turkey, and Asian nation with its exclusive Mi and Redmi Series mobile phones. Xiaomi shipments of smartphones were around 90 million in 2017 and have able to create a big presence in the top 10 smartphone companies in the world and are known as the Apple of China. Xiaomi had a market share of 15.5% in 2017. Xiaomi is 6th in the list of top mobile brands 2018.Units Shipped (Million) : 95Profit (in million $): 1000Sales (in million $): 170005. VivoVivo is the largest manufacturer of smartphones, smartphone accessories, software, and online services based in China.Started in 2009, this is the fastest growing smartphone company in the world having a strong global footprint with its wide mobile range. Vivo had recently developed Android-based software system known as Funtouch. Vivo entered the top mobile phone brands within the half quarter of 2017 with a worldwide market share of 10.7%. Some of the premium smartphones of Vivo are X series, V series as the middle-priced phones and the Y series as the low-end smartphones. In 2018 Vivo released exclusive smartphones X20 UD, the world's preliminary smartphone with a fingerprint scanner that utilized the "ClearID" technology. Celebrity endorsements, sponsorships have propelled the brand vale of Vivo. Vivo recently launched V9 mobile series that is similar to Apple’s iPhone X with its notch display. Vivo is the first Android company to launch smartphones that features a notch display similar to Apple’s iPhone X that has a full view display with a notch on top. Vivi is 5th in the list of top mobile brands 2018.Units Shipped (Million) : 95Profit (in million $): 1125Sales (in million $): 464844. OppoChina based Oppo mobile phone brand is one of the most prominent new companies in the world.The Oppo company, which was formed in 2011, is headquartered in China and has a strong global presence with its mobile devices and accessories. Oppo has produced a wide range of smartphones ranging from the low segment to targeting the affluent customer segments. Some of the most prominent phones brands by Oppo are Find 5, Find 7, N1, N3 etc. Oppo’s A77 model was launched in 2017. Oppo has managed to create a strong brand presence despite being a late entrant in the smartphone market. However, aggressive marketing and branding along with good product quality has enabled Oppo to be among the top mobile brands globally.Oppo in 2017 became the official sponsor of the cricket team for India, which gave the brand massive credibility as well presence. More over, the company in India engaged with Bollywood celebrities who became the face of the brand. Apart from this, a strong distribution network covering more than 200,000 retailers has enabled the brand to have a strong reach within India itself. Oppo is 4th in the list of top mobile brands 2018.Units Shipped (Million) : 111Profit (in million $)~ 1400Sales (in million $)~ 600003. HuaweiFounded in 1987, Huawei is the largest smartphone manufacturer in the world based in China.Huawei has the best innovation centers across the globe and in 2016, Huawei invested 14% of their revenue in R&D. Huawei has global presence in more than 170 countries and is also anticipated to build and develop its own operating system, which shows its strong presence in the mobile market. Huawei shipped 153 million smartphones in 2017. Huwaei was positioned among the top Fortune 500 companies in 2017. Also a good number of the Fortune 500 companies chose Huawei as their business partner for digital transformation. In March 2018, Huawei launched a highly sophisticated and powerful smartphone; the Porshe Design HUAWEI Mate RS mobile phone featuring innovative in-screen fingerprint sensor and dual fingerprint design, AI processor and triple camera with high quality image capture. This smartphone is going to surpass the most demanded smartphone. In March 2018, Huawei unveiled the much-anticipated smartphone models such as HUAWEI P20 and HUAWEI P20 Pro which has the world's first Leica triple camera. All innovations and R&D have enabled Huawei to establish itself as a top global mobile phone brand. HUAWEI has set the expectations high for smartphone photography through which anyone can capture professional quality images. Huawei is 3rd in the list of top mobile brands 2018.Units Shipped (Million) : 152Profit (in million $) 6890Sales (in million $) 876462. AppleApple maintains its top position in the smartphone industry as the most preferred brand.Founded in 1976 by Steve Jobs and Ronald Wayne, Apple today is known for its classy iPhones. Apple has a large customer base because it offers products which have superior design and features, which have become more of an aspirational brand for people worlwide. Apple has been able to maintain the quality of its products as it always incorporates rapid technological advances and evolving design approaches. Many competitors of Apple try to imitate its features and sometimes even do price cutting mechanism to gain market share but it has not able to deter the large customer base Apple has. This shows why Apple is the top global mobile phone brand in the whole world. Apple has worldwide presence in around forty countries and 499 retail stores in twenty two countries as of December 2017. Apple INC is known for its high specification and stylish iPhone that is the signature product of Apple. In 2017 its revenue amounted to $229 billion. Apple unveiled its first-generation iPhone on 2007, and the most recent iPhone mobile models are the iPhone 8, iPhone 8 Plus the new generation of iPhone in a stunning red finish which has advanced cameras, powerful and smartest chip ever in any smartphone. Apple is anticipated to launch iPhone X Leather Folio, future generation iPhone which can have a full-screen display with a face ID. Apple is 2nd in the list of top mobile brands 2018.Units Shipped (Million) : 215Profit (in million $): 48,351Sales (in million $): 229,2341. SamsungHeadquartered in Samsung town, Samsung electronics is a South Korean company and is a subsidiary of Samsung group.Samsung mobile is market leader in the smartphone industry as it continuously strives to enhance product capabilities through its extensive R&D. Samsung has broadened its offerings for mid and lower priced smartphones to high-end mobile phones in the affluent segment. Samsung is popular for its Samsung Galaxy smartphone range. The flagship products of Samsung are Samsung Galaxy S7 edge+ and Galaxy Note 7. Recently, Samsung developed Tizen OS for its smartphones an alternate to its Android-based smartphones. Galaxy J7 Prime 2 is the latest mobile launch of Samsung in March 2018. For its latest launch Galaxy S9 Samsung also partnered with Audio expert companies such as AKG and Dolby to give customers a high quality sound experience. Samsung India is re-launching its most successful smartphone, Galaxy S8, with a majestic Burgundy Red color. Samsung had a market share of approximately 20%, making it one of the top mobile phone brand globally. Samsung is 1st in the list of top mobile brands 2018.Units Shipped (Million) : 315Profit (in million $): 18,947Sales (in million $): 170,625Ranking Methodology:1. The leading mobile phone companies were taken2. Parameters like Sales, Profit and Shipments are considered3. The final rankings were based on the scores obtainedSource: Top 10 Global Mobile Phone Brands in 2019 | Best Phone Companies | MBA Skool-Study.Learn.Share.

Capital Gains Tax on Property: Short term, Long term, calculationsCapital Gains TaxProperty held for year or more to qualify as long term assetTax Treatment Holding period criteria FY2017-18 onwards Holding period criteria upto FY2016-17 Tax RateShort terms capital gains Less than 2 years after registry or issue of OC, whichever is later Less than 3 years after registry or issue of OC, whichever is later Marginal tax rate – (upto 30%), 3% cess and upto 15% surchargeLong Term Capital Gains 2 years or more 3 years or more 20% with indexation benefit and 10% without indexation ebenfit Exemptions available if proceeds invested in residential house or Section 54EC bonds. Indexation benchmark changed to 2001 from 1981-82 effective 2017-18Income Tax SlabsCapital gains tax on sale of propertyAre you a property owner? Looking forward to sell your old property? In case you sell your property at a price higher than its purchase price, then you would be liable to pay capital gains tax on the profit you earn on the sale of your property.For instance, if you bought a house/ land 20 years ago and you wish to sell it now, it can be expected to fetch significant appreciation to its purchase value. This indicates that you have earned "Capital Gains" on your property and hence, are liable to pay tax on these gains. The rate at which your capital gains will be taxed depends on the tenure for which you held the property and will be accordingly classified as Short Term Capital Gain or Long Term Capital Gain.Short Term Capital Gains TaxShort Term Capital Gain on property is considered as a gain from selling a property which was held by you for less than 12 months. As a taxpayer, you are liable to pay tax on short term capital gain on property as per your applicable marginal income tax slab.Some key points to remember:You are allowed to adjust/ reduce your sale consideration for any brokerage, commission you had paid at the time of property saleYou are allowed to deduct any expenditure on construction and home improvement incurred during the period you held/owned the assetBenefit of indexation, i.e. adjustment for Inflation is not allowed on a property transaction classified under short term capital gainNo exemption or savings is allowed on short term capital gain tax u/s 54 i.e. by re-investment in property or buying capital gains bond issued by REC or NHAILiability under Short Term Capital Gains can be significantly high, if you fall in the higher income tax slab. It is advisable to plan to sell the sale of your property after 3 years of holding, so as to shift it to the category of Long Term Capital GainsShort Term Capital Gain Tax CalculatorIllustration of Short Term Capital Gains: Mr A sold his property January 2016 at Rs. 50 lakh, which he had purchased in December 2014 for Rs. 30 lakh. As per his income, Mr. A falls in the highest tax slab of 30%. Mr. A spent around Rs. 2 lakh on house improvement during the period and also paid a brokerage of 0.5 per cent of the sale price of the house at the time of selling the house. What will be his taxable capital gains and what is the tax amount payable by him?In this illustration, the gain achieved on this property in its 2 year holding period will be considered as short term capital gain and will be taxed as short term capital gains tax, as per his applicable income tax slab. In this case, as shown below, Mr. A's short term capital gains will be Rs. 17.75 lakhs and he is liable to pay a tax of Rs. 5,32,500 on this.This has been explained in the table below:Particulars Amount in RupeesSale price of the house 5,000,000Less: Any transfer expenses such as brokerage, commission etc 25,000Net Sale Consideration 4,975,000Less: Purchase Price of the house 3,000,000Less: House improvement costs 200,000Gross Short Term Capital Gain 1,775,000Less: Any exemptions available under sections 54, 54B, 54D, 54EC, 54ED, 54F, 54G NilNet Short Term Capital Gain 1,775,000Short Term Capital Gain Tax Liability for Mr. A (at his marginal tax rate slab of 30%) 532,500Long Term Capital Gain TaxWhen you sell your property that is owned by you for more than one years, any gain arising from such sale will be considered as long term capital gain. Long term capital gain is calculated as the difference between net sales consideration and indexed cost of property. The benefit of indexation is allowed to set off the impact of inflation from the gains made on sale of the property so that the actual gains on property will be taxed. This is based on the logic that value of money decreases constantly because of inflation and hence, it is unfair to tax a long term property holder for the nominal gains accruing to him only because of inflation.Key points to remember:Current Long Term Capital Gains tax rate is 20% after indexation or 10%.You are allowed to adjust your sale consideration for any brokerage, commission you had paid at the time of property saleYou are allowed to deduct any expenditure on construction and home improvement incurred during the period you held/owned the asset. Similar to the indexation benefit available on the purchase price, any house improvement expenditure is also allowed to be adjusted as per the Cost Inflation Index published by Reserve Bank of India.You can get your loan term capital gains tax reduced/exempted u/s 54 i.e. by investing the gain in residential property or buying capital gains bonds issued by REC or NHAI.Cost Inflation Index and its Impact on Capital GainsThe value of money decreases constantly because of inflation. Thus, income tax department in India allows indexing the cost price of property, so as it to adjust it for inflation related price appreciation. The cost inflation index is upgraded by Reserve Bank of India in every financial year. The table below captures the Cost Inflation Index since its base year 1981-82 (Base Year = 100)FINANCIAL YEAR COST INFLATION INDEX FINANCIAL YEAR COST INFLATION INDEX2017-18 - 2016-17 11252015-16 1081 2014-15 10242013-14 939 2012-13 8522011-12 785 2010-11 7112009-10 632 2008-09 5822007-08 551 2006-07 5192005-06 497 2004-2005 4802003-2004 463 2002-2003 4472001-2002 426 2000-2001 4061999-2000 389 1998-1999 3511997-1998 331 1996-1997 3051995-1996 281 1994-1995 2591993-1994 244 1992-1993 2231991-1992 199 1990-1991 1821989-1990 172 1988-1989 1611987-1988 150 1986-1987 1401985-1986 133 1984-1985 1251983-1984 116 1982-1983 1091981-1982 100Long term Capital Gain CalculatorIllustration: Mr A sold his property in January 2016 at Rs. 50 lakh, which he had purchased in December 2011 at Rs. 30 lakh. As per his income, Mr. A falls in the 30% marginal tax rate slab. Mr. A spent around Rs 2 lakh on house improvement in January 2013 and also paid a brokerage of 0.5 per cent of the sale price of the house at the time of selling the house. What will be his taxable Capital Gains and what is the tax amount payable by him?In the above illustration, the buyer held the property for more than one years and hence, the gain earned on selling this property will be considered as long term capital gain. The long term capital gain will be taxed at the rate of 20 %.Mr A will be liable to pay a tax of Rs 1,18,007 on his Long Term Capital Gains of Rs 5,90,034 on this property transaction.The calculation for long term capital gain with indexation benefits has been explained in the table below:Particulars Amount in RupeesSale price of the house 5,000,000Less: Any transfer expenses such as brokerage, commission etc 25,000Net Sale Consideration 4,975,000Less: Indexed acquisition cost of the house (Purchase Price in FY12 adjusted to FY16 Cost Index) i.e. Rs 30 Lakh * Cost Index of FY16 (1081)/Cost Index of FY12 (785) 4,131,210Less: Indexed house improvement costs ( Home Improvement Expenditure in FY13 adjusted to FY16 Cost Index) i.e. Rs 2 Lakh * Cost Index of FY16 (1081)/Cost Index of FY12 (852) 253,756Gross Long Term Capital Gain 590,034How to save tax on long term capital gains?A property is a wealth which is created over a life and typically, is sold to amplify your existing wealth which justifies levying a tax on it. Also, tax from capital gains directly affects investment motives. Indian Income tax rules, however, contain provisions, that in a few scenarios exempt tax from paying long term capital gains tax.1. Under section 54, sell a residential property and invest the gains to buy a new residential property and claim exemption on capital gains tax.Under section 54, you can claim exemption on capital gains tax exemption, if you invest full or part of your sale proceeds of a residential property in India in another residential property in India. Rules for exemption are as follows:Exemption is available to individuals and HUFs and is available for one residential propertyThe capital gains from sale of a residential property can be set off against the purchase of new residential house. The property sold and purchase should be in IndiaThe new residential house can be bought either one year before the sale of old house or within two years from the date of sale of the previous property. In case you plan to construct a house, the construction of the house should be completed within 3 years from the date of sale of the previous propertyOnce you have purchased or constructed a new house, you cannot sell it in less than 3 years. If you sell it before 3 years, you will not get the benefit of capital gain exemption and your sale proceeds will be taxable. These 3 years are calculated from the date of acquisition or completion of work of the new house.The amount of exemption claimed is lower than the amount of capital gains or the cost of new house purchased.2.Under section 54 F, sell any asset other than a residential property and claim capital gains tax exemption by purchasing a residential houseRules for exemption under Section 54 F are as follows:Exemption available to individuals and HUFsThe new residential house can be bought either one year before the sale of old house or within two years from the date of sale of the previous property. In case of construction of a house, the construction of the house should be completed within 3 years from the date of sale of the previous assetExemption available only if the taxpayer does not own more than one residential house on the date of transfer of such asset other than the one that he has bought to claim deduction under Section 54 FIf the whole sale consideration is not invested and only a part sale consideration is invested in the purchase of new property, the amount of exemption shall be provided proportionately i.e. Amount Exempt= Capital Gain X Amount Invested/Net Sale Consideration3.Under Section 54 EC, sell a long term capital asset and get capital gains tax exemption by investing in 54EC Capital Gain BondsThis section comes in handy for tax payers who have sold their assets and are liable to pay long term capital gains tax, but are unable to take benefit from the rules under section 54 by buying another residential property. These tax payers can save tax by investing their gain in Capital Gains bonds. Rules for exemption are as follows:You have to invest the "capital gained" money into these bonds within six months of selling your propertyThe money invested into these bonds will be exempted from the capital gain taxTDS is not applicable on money invested in capital bonds. However, interest income from capital gains bonds is taxable. The tenure of capital gains bonds is 3 years and the redemption is automatic. You will not get any interest after 3 yearsYou are not allowed to withdraw your money invested in Capital Gains Bonds before 3 years from the date of investmentThe face Value of bond is 10,000 and you need to invest a minimum of Rs 20,000 in these bondsThese bonds are usually issued by REC and NHAI with an interest rate of 6%These bonds can be held in either demat or physical formThese bonds cannot be pledged as collateral for obtaining loans4.Park your capital gains amount in capital gains account in case you are unable to purchase a property before your Income Tax filing dateCapital gains account scheme is available as a temporary method to save capital gains tax. This scheme is for people who are unable to invest in a new property before filing the income tax return. The scheme was introduced in 1988 and under the scheme, a capital gains account may be opened only with specified banks or institutions. The taxpayer can put his gain on his asset transaction in this account for three years. He can withdraw the amount invested for purchasing or constructing his new house, as he takes the decision to do so within the next three years. Features of the scheme are as follows:The taxpayer should mention that he has opted for the scheme in his Income Tax ReturnYou can make the deposit anytime in installment or lump sum before the due date of filing income tax returnTwo types of accounts will be opened under this scheme. One account will enable you to withdraw money as per your requirements and other account will be like a fixed depositMoney withdrawn from any account has to be used within 2 months for specified use to avail capital gains exemptionThe deposited amount in this scheme can't be used as mortgage for any loanThe interest on capital gains account is taxable. TDS will be deducted as per rules5.Set off your capital gains against any capital loss carried forward from previous yearsIncome Tax Act in India allows that if a tax payer has any capital loss that have incurred earlier and carried forward, he can set off his capital gains against those losses and hence reduce his tax liability. Some key points to remember are:Short term capital gains can be set off against short term capital loss and long term capital gain can be set off against long term capital loss onlyThe capital loss can be carry forward for a period of 8 yearsThe capital loss carried forward should have been mentioned in income tax returns.