Expert Assisted
Capital Gains
Tax Filing

The taxability of the land depends on how long it has been held. If held for more than 24 months, it qualifies as a long-term capital asset and indexation benefits apply.

In the case of short-term capital gains, the profits are taxed at slab rates. However, in the case of long-term capital gains, there are two options available to save capital gains tax:

Section 54F of the Income Tax Act provides a full exemption if the entire sale proceeds are reinvested in purchasing or constructing a new residential house — provided the individual does not own more than one other residential property at the time of sale. This investment must be made within two years after the sale date, or the construction must be completed within three years.

Section 54EC allows investment of up to ₹50 lakh in specified capital gains bonds issued by NHAI or REC. These investments must be made within six months of the date of sale to claim the exemption.

To reduce long-term capital gains tax, the taxpayer has two options under the Income Tax Act. First, he can invest the capital gains in a residential house property in India, following the guidelines of Section 54 of the Act. This allows him to purchase a new residential house property within one year before the property's sale, or within two years after the sale date, or construct a new property within three years after the sale.

Additionally, Section 54EC of the Act provides him an option to save on taxes by investing the capital gains in long-term bonds issued by notified institutions like NHAI and RECL within six months of the property's sale.

Furthermore, under the India–Canada DTAA agreement, tax credits may be available to eliminate double taxation on the property sale proceeds.

If the taxpayer is not able to invest in a new property immediately, he can deposit the LTCG amount in a Capital Gains Account Scheme (CGAS) account until he is ready to reinvest. Once he identifies and then invests in a new property, the Section 54 exemption can be availed. He must reinvest these funds within two years from the date of the original transaction, failing which the exemption will be withdrawn.

This allows full flexibility for planning the reinvestment while still protecting the tax exemption during the interim period.

Yes, you can save tax on capital gain income by creating an HUF and transferring your capital gain income to the HUF entity. Here's how you save tax under both the old and new regimes: