ITR filing date nears, how to avoid property tax, understand from experts

Tax Planning: The last date filing income tax is near. Now only 6 counts are left in filing ITR and the government has said that the date will not get postponed. So you have to get this work done quickly. While filing ITR, it should be kept in mind that if you are selling your house then you will also have to pay tax. It comes under the purview of the capital gains tax. It is obtained by deducting the amount spent on buying the property from the sale of the property and expenses on its repairs etc.

Capital gains arising from the sale of assets are liable to tax as per the holding period. Tax is to be paid on short term capital gains as per the income tax slab. Think of it like this that if you sell the property for a holding period of less than three years (36 months), then the profits will be treated as short-term capital and tax will be paid on it.

On the other hand, if you sell the property after 36 months of its acquisition, then long term capital tax gains tax will be payable on the profits. With the benefits of indexation, real estate attracts a ces of 3 percent plus long term capital gains tax at the rate of 20 percent. Keep in mind that you will also have to pay tax on the profits from the sale of property inherited by gift or inheritance.

Suppose you had made any improvement or expansion in the property after buying it. Income tax exemption can be taken by deducting the index cost of this expenditure. This will reduce the burden of capital gain tax. Another way is that you can save tax under section 54 of Income Tax by investing the profit amount in buying another house. This discount will be available on purchase of second ready-to-move house within three years of sale.

Apart from this, even if there is an expense in the sale of property, you can still avoid capital gains tax. For example, you can take a discount on the brokerage given for selling the property. Apart from this, if you have spent on advertisement, auction, registry, etc., then you will also get the benefit of the discount.

You can also save tax by using the ‘Cost Inflation Index’ as per the rules of Income Tax. The purchase price can be increased by using the cost inflation index. If you do this, you will have to pay less tax.