Property Tax Done Right — Save Lakhs Legally

For LTCG under the default route: Taxable Gain = Sale Price (or stamp-duty value, if higher by more than 10%) − Cost of Acquisition − Cost of Improvement − Transfer Expenses, taxed at 12.5%. If you are a resident individual or HUF and bought the property before 23 July 2024, also work it out the old way: inflate cost using the Cost Inflation Index (Indexed cost = Original cost × CII of sale year ÷ CII of purchase year) and tax the smaller gain at 20% — then pay whichever is lower. Example: bought in 2008 for ₹30 lakh, sold for ₹95 lakh. At 12.5% the tax is on a ₹65 lakh gain (about ₹8.1 lakh before cess). With indexation the cost more than doubles, the gain drops to a fraction of that, and 20% of it is usually far less — so older property often favours indexation, while recently bought property favours 12.5%.

If the property is worth ₹50 lakh or more (consideration or stamp-duty value, across all buyers and sellers) and the seller is resident: deduct 1% on the whole amount, not just the excess, and deposit it with a challan-cum-statement on the income-tax portal within 30 days of the end of the month of payment — Form 26QB for payments up to 31 March 2026, Form No. 141 under the Income-tax Act, 2025 for payments from 1 April 2026. Only your PAN is needed. If the seller is an NRI: section 195 applies instead, on the full price with no threshold — 12.5% for a long-term gain or 30% for a short-term gain, plus surcharge and cess — and you need a TAN and file Form 27Q, unless the seller gives you a lower deduction certificate. Failure attracts interest, a late fee and penalty.

Rental income is taxable under "Income from House Property." Gross rent is reduced by municipal taxes paid, and then a standard deduction of 30% (flat — no proof required) is allowed. If there is a home loan, interest is deductible up to ₹2 lakh (self-occupied, old regime only) or fully for let-out property (loss set off against other income capped at ₹2 lakh under the old regime, remainder carried forward; under the new regime the loss cannot be set off against salary). Net income after these deductions is added to your total income and taxed at slab rates.

Yes, under Section 54. You can claim exemption equal to the amount reinvested in a new residential property. If you reinvest the entire LTCG, the tax liability becomes zero. Key conditions: the new property must be bought within 1 year before or 2 years after sale (or constructed within 3 years); you cannot sell the new property within 3 years; and from FY 2023-24, the cost of the new property is counted only up to ₹10 crore, so gains above that stay taxable. TaxClue ensures all conditions are correctly met.

Under Section 43CA and 50C, if the sale consideration is less than the stamp duty value (circle rate), the stamp duty value is deemed to be the sale consideration for capital gains computation — even if you sold for less. This prevents underreporting. However, if the stamp duty value is up to 110% of the actual sale price, the actual price is accepted. If you dispute the stamp duty value, you can ask the Assessing Officer to refer the valuation to a Valuation Officer. The buyer faces the mirror rule: paying less than stamp-duty value by more than 10% (and more than ₹50,000) is taxed in the buyer’s hands as other income. TaxClue advises on this critical issue before you finalise any property deal.

Only for payments made up to 31 March 2026. The Income-tax Act, 2025 applies from tax year 2026-27, and for payments from 1 April 2026 property TDS is paid through Form No. 141 — a single challan-cum-statement that replaces Forms 26QB, 26QC and 26QD — within 30 days of the end of the month of deduction. The 1% rate, the ₹50 lakh threshold and the PAN-only process for a resident seller continue.

Only a resident individual or HUF selling land or a building acquired before 23 July 2024. They compute the tax both ways — 12.5% without indexation and 20% with indexation — and pay the lower. Non-residents, companies and firms, and anyone selling property acquired on or after 23 July 2024, pay 12.5% without indexation. The holding period for property to be long-term is more than 24 months.

Yes. Many sellers put part of the gain into a new house under Section 54 and the balance into 54EC bonds, up to ₹50 lakh, within 6 months of the sale. The same rupee of gain cannot be exempted twice, and each section has its own time limit and lock-in — 3 years for the new house, 5 years for the bonds.

Declare the full rent in your return and claim the TDS as a credit. Check that it appears in your Form 26AS and AIS — if a tenant deducted but did not deposit or file the statement, the credit will be missing and you should ask them to fix it. An individual tenant paying more than ₹50,000 a month deducts 2%; a business tenant deducts under the general rent provision above its own threshold.

A promoter must register any project on more than 500 sq m or with more than 8 apartments with the state RERA before advertising or booking, keep 70% of buyers’ money in a separate project account, get those accounts audited each year and post quarterly updates. An agent who sells units in a registered project must register with RERA too. Both need GST registration once turnover crosses ₹20 lakh, and a tax audit applies once turnover crosses the audit limit.