Tax on income obtained from selling a plot

[jackalbda]

What is the tax liability on the income obtained by selling a plot.?
Plot being sold after 3 years of purchase , will the income fall under
"short term gain " ? In any case how much percentage should I pay? Also
is there any option of reinvestment, which will avoid this tax liability ?

[blrsiteseeker]

Hi Jackalbda,

I had read this on some other forum and I forget where, but here is a spread sheet that I had created to calculate the capital gains. this will be long term capital gains (after 3 years it is considered long term).

if you had purchased a 1200 sq. ft. site in 2005 at rs. 400 / sq. ft. and sold it in 2009 at rs. 1000 / sq. ft. the spread sheet shows the tax you owe. Plug in your numbers and you should get the exact amount. (there is some adjustment for inflation so you wont really be paying taxes on rs. 600 / sq. ft as gains).

Also, if you invest in another property within a year of sale (I think it even applies a year backwards, but check that out more), you will not owe any capital gains.

hope this helps you.

[PlotGuy]

You should consult a good professional. Tax laws keep changing every year. While blrsiteseeker's advice is well intentioned, it may not be up to date. Please get in touch with an auditor or tax professional.

[blrsiteseeker]

my intention was to give you an idea of how much it would be. this is only a ballpark. you will have to use the exact tax forms to compute how much it is - you may need a tax consultant, but the forms from the Tax authorities are always the ultimate.

[jackalbda]

Thanks blrsiteseeker / PlotGuy for getting back !!