Taxation In Real Estate

Taxation is one of the disadvantages of investing in real estate, as we have learned in the earlier unit. In this section, let us discuss the different taxes that are levied while selling any property: 

A. Capital Gains Tax:

A capital gain tax is levied at the time of sale of the property. This tax is paid by the seller, irrespective of the location based on the time period for which the property is held. If the property is held for less than 3 years, the tax would be levied as per income tax slab rate of the individual and if sold after 3 years, then a flat rate of 20% shall be applicable.

B. TDS @ 1% on the sale of Property:

If the transaction value is more than ₹50 Lakhs, Then TDS @ 1% is deducted from the selling value.

C. Stamp Duty on Property:

At the time of transfer of title of property and registration with the Govt, stamp duty is required to be paid on the property. The stamp duty rate is decided by the respective states. Some also provide a concession in case the new owner of the property is a female.

D. GST on Property:

GST on real estate in case of under-construction properties is 12%. GST is to be charged at 5% without Input Tax Credit (ITC) on residential properties that are not part of the affordable housing segment, whereas GST to be charged at 1% without ITC on residential properties that are included in the affordable housing segment.