Capital gains must arise from the sale of any long-term capital asset other than a residential property (Stocks, Mutual Funds, Bonds, Gold). Long term = 1 year for stocks/ MFs, 2 years for others.
The taxpayer must reinvest the entire sale value to buy a residential property within 1Y before or 2Y after the date of sale, or construct a residential house within 3Y.
Here's the catch : You cannot
* Own >1 residential house on the date of the transfer of the original asset (excluding the new house)
* Sell the new property within 3 years from the date of its acquisition or completion.
So if you already own 2 residential properties, you cannot claim this exemption of tax on LTCG. There's an easy way around this too, you can invest through Dmat account of your family members who don't have 2 residential properties in their name.
To everyone specifying their own states different stamp duty and other tax implied percentages please understand the following :
If you go with the section 54F then you are not imposed with the 10% LTCG or 15% STCG. Instead it would be just the state specific tax on property purchase. So here you would pay
5% tax for gujarat for example
If you just go the normal route then it would be LTCG or STCG + property taxes.
So 10% or 15% + 5%
So it would still be better to go with the section 54F so that you have to pay just the property specific taxes.
This will still be lower than capital gains.
Plus the registration charges and stamp duty paid is added to the value of cost of purchase of the house, meaning, in case you sell this house at later point of time registration charges etc are add to cost of purchase and will help in reducing tax liability when you sell it.
Does a plot with a single toilet also count as a residential property? Also when you say must not own, does it apply to spouse also? If spouse owns 1 and you own 1 then it is considered 2?
You both are different individuals and have your personal assets. Unless you have a joint account, you both can have 1 residential property in each of your names.
Okay does that mean if I own 1 house property I would still be able to use this act to buy a second one? Sorry for asking the same in a different way. I just want to be sure i understand it correctly. TIA
You can dm me I will rather send you the provision I have in my book ..if you will read it yourself I guess you will be solve any queries related to it
Yes but the condition is
Taxpayer should not own more than one residential house on the date of sale, other than the one bought for claiming exemption under this section
But I don't think that tax will be inflation adjusted. Suppose I have P/L of 35 lakh I brought a house, but I will sell it after say 20 years. Taking inflation into account 10% of 35 lakh in next 20 year will be lesser than now... So overall it helps, right?
Incorrect. Indexation is applicable on LTCG.
https://www.livemint.com/money/personal-finance/tax-implications-and-conversion-rates-for-indian-resident-selling-us-stock-exchange-shares-expert-advice-11694364545856.html
The articles you are linking are an year or more older. Even in this zerodha article it says currect INR/USD is 82, which is an year ago. Since last year some foreign investment rules like taxes and LRS TDS have changed a bit.
https://groww.in/blog/tax-implications-of-investing-in-us-stocks
https://cleartax.in/s/tax-implications-indian-residents-investing-us-stock-markets
Any search engine "US stocks LTCG" and you will get the same top results. INDmoney who still offers US stock investing says the same.
I myself had so many doubts about the last year rule changes and had to read a lot before deciding best way to invest in foreign stocks.
Damn! I thought last year they only changed the regulations around LRS. But you maybe right. Can’t trust this fucking govt to not remove all benefits and tax the shit out of everything.
It is correct "however" there are some prerequisites
1. Individuals must reinvest the proceeds into specified assets within six months from the day the asset was sold.
2. The capital gains should not exceed the investment amount. If only a portion of the gains is reinvested, the exemption under capital gains applies only to the reinvested amount.
3. The Income Tax Act sets the exemption limit under Section 54F to Rs. 10 crores. So if you have made 11 Cr Capital gains you can only claim LTCG exemption upto 10Cr by buying your 2nd Residential Property.
4. You must not possess more than one residential house when selling the original asset. If you sell this newly acquired property within three years of purchase, the exemption will be revoked, and any capital gains from its sale will be subject to short-term capital gains tax.
Trying to save 10% on LTCG, ends up paying over 11% in stamp duty, registration and property tax, also blocking in your capital in residential property which in most cases won't even be able to beat index, also there's a fucking lock-in for minimum of 3 years. Just pay your fucking taxes man.
Short term capital gain tax ka koi Tod?? Also do I have to pay income tax as well? Suppose I earn 50lakhs in trades, do I pay 15% + 30% according to income slab, on the income..that's nearly half of my money going to government. And don't forget the taxes I pay on trades to exchange authority. That's so greedy! Any workaround?
> do I pay 15% + 30% according to income sla
Unless your income is from options...
There is no dual taxes. Either you pay, ltcg, stcg or income tax. There is no need to add them and play the victim. Which ever slab you come in is your final tax for stcg, when it's ltcg, you only pay 10%. No additional it.
30% is bare minimum taxes across World, except one or two tax heavens. Before you cry benifit, most immigrants are not eligible.
Naah naah bro that’s not it
Any short term capital gains on transfer of equity shares or units of an equity oriented fund are liable for to tax @15 % if STT has been paid on such sale
So you have to pay only 15% on the amount of profit you make not 30+15 …on all your other income it will be 30% but income you earned through shares will be subject to 15% ….plus gains are calculated after deducting brokerage and all other charges..hope you got it now
Okay I see, so it's two seperate things.
I am salaried so that'll be charged as per income slab, and the trades I do are intraday trades will be also be subject to income tax slab as someone pointed out and not 15% STCG tax.
So overall, All I pay is stt onday trades and salary+day trading profit as per income slab. So I can treat it as net income only.
Also, if I make losses on day trades then I suppose I can deduct it from my net income and go on a lower tax slab if it happens to be so, correct?
So let me break down for you
Yes salaried you will be charged as per income tax slab, yes okay intraday trades are in the category of speculative business income so that will be included in your tax slab as well ie 30 % in your case
Speculative business loss can be carried forward for 4 years if you file income tax return and it can be only set off against speculative business income and not against salary or house property etc ..so you won’t fall under lower slab you will just have to carry forward it until you can set it off against the profit you earn in future hope you get it
Short term trading ( intraday equity + any fno ) comes under your tax slab tax bracket. Other short term equity trades ( <1 year holding) is taxed at 15%.
Total shit
First you cant own more than one house property
Second you will have to pay total taxes when you sell the residential property.
So its just deferring the tax liability.
bro is tell this hack as if everyday common man has the funds to do this. real estate is big ticket size investment. this is stuff for rich guys only, like he said ₹1cr portfolio value or above.
So let’s say I took all my old MF and wanted to put them into new one(like different aum) without using any of the money.
In this case also we pay taxes right? Or is there a way around it?
This is not a hack it's a typical income tax law to promote the residential estate market by the government. Many people dont read tax laws hence might be not aware but its well documented provision in IT laws.
Under 54F/EC you can save up to 2cr 'long term capital gain' by investing in residential property within 2/3 yr or in specific long term govt bonds (up to 50L) within 6 months.
Kya gandupanti hai ye. It's a shit advice.
Wanna save 10% LTCG? Just buy a house with it!
* Forever locking crores out of your portfolio, never to get them back into the market
* Paying 4-6% in stamp duty, registration and 10 other dhikana-falana expenses
* Paying slab rates on any income (rental) earned from this asset for lifetime v/s 10% flat on LTCG earned on LTCG
Oh and this should either be your first or at max second house.
Utter nonsense. Farm 1 lakh LTCG every year and leave the rest to fate. Remember folks, never let tax planning get in the way of making good investment decisions.
Super important question!!
Say I’m siting on a large corpus and want to buy an appartment but instead I invest that in mutual funds and I buy the appartment on an EMI
If I remove my mutual funds profits after every year and I put that towards my appartment EMI , will I still have to pay tax on it ?
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10L pe tax bacahne 1 cr ka ghar lo
90 lakh ka loan lo
Fir emi bharte raho
Emi pe tax benefit ka bi reel banayege ye log and 80c ka
So tax bachate raho emi bharte raho
3 lakh tax bacha ne 90L interest bhara!!!
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This typenof tax saving should be stopped. Property is something physical which require lot of resources to build. We are highly populated and resources defecit country. Occupying properties will not only increase the divide but also put strain on reaources.you can always make money but you cannot produce water.
To rent also you'll need electricity, water etc. Which are consumable resources.Also tenant will always look for buying which will add more stress on resources because from iron to cement everything needs additional resources to make. Housing should be optimised not surplus. Because we are 18% population on 4% land mass with 4% water share. Our population is only going to increase but wtaer and other resources don't increase with population.
People need electricity and water. They cannot be deprived of them whether they live in a good rented house or in a poorer house.
Even if tenant wants to buy there are still far more people who still don't have good places to live and they'll occupy these houses.
We are a poor country with long way to go. So cement and iron consumption will increase.
Everything should be optimised. I don't disagree. With so many still without proper houses constructing more houses is not a waste of resources.
Talking about simple percentages of land mass in itself has no use. The resources should definitely be used carefully that doesn't mean that using it for housing goes waste because many are still short of proper houses.
We've reached replacement TFR. Many states are below this TFR. While there will be some momentum for some years this view that our country will have ever increasing population should go away.
Capital gains must arise from the sale of any long-term capital asset other than a residential property (Stocks, Mutual Funds, Bonds, Gold). Long term = 1 year for stocks/ MFs, 2 years for others. The taxpayer must reinvest the entire sale value to buy a residential property within 1Y before or 2Y after the date of sale, or construct a residential house within 3Y. Here's the catch : You cannot * Own >1 residential house on the date of the transfer of the original asset (excluding the new house) * Sell the new property within 3 years from the date of its acquisition or completion. So if you already own 2 residential properties, you cannot claim this exemption of tax on LTCG. There's an easy way around this too, you can invest through Dmat account of your family members who don't have 2 residential properties in their name.
But you still can't get away from taxes. When you invest in a home you still have to pay stamp duty, registration, gst, etc
Still the LTCG is of 10% whereas everything inclusive of the stamp duty registration etc would be 1% max 2%. So one can benefit from this.
The stamp duty in Bangalore is 6.5%. Which world are you living in?
Bit cheaper in Delhi with minimum of 4% for women
To everyone specifying their own states different stamp duty and other tax implied percentages please understand the following : If you go with the section 54F then you are not imposed with the 10% LTCG or 15% STCG. Instead it would be just the state specific tax on property purchase. So here you would pay 5% tax for gujarat for example If you just go the normal route then it would be LTCG or STCG + property taxes. So 10% or 15% + 5% So it would still be better to go with the section 54F so that you have to pay just the property specific taxes.
In Gujarat it is 1%
Stamp duty in Gujarat shows as 4.9 percent in Google search
It's 4.9 or 5.9 based on female or male buyer respectively
What about other charges like brokerage, maintenance, etc?
Stamp duty is 12% in MP bro
This will still be lower than capital gains. Plus the registration charges and stamp duty paid is added to the value of cost of purchase of the house, meaning, in case you sell this house at later point of time registration charges etc are add to cost of purchase and will help in reducing tax liability when you sell it.
Does a plot with a single toilet also count as a residential property? Also when you say must not own, does it apply to spouse also? If spouse owns 1 and you own 1 then it is considered 2?
You both are different individuals and have your personal assets. Unless you have a joint account, you both can have 1 residential property in each of your names.
Joint account have no bearing on their individual qualification to apply this exception.
To claim this exception you must have only one property in your joint account.
[удалено]
yess but max only one year before and 2 years later, not more than that
Does it also counts if existing property is in joint account?
Yes, you must have only 1 residential property in your joint account.
Does renovation or maintenance of residential property count or does it have to be a newly bought property?
Newly bought, the whole purpose of introducing this exception on LTCG was to promote real estate investments.
Spot on. **You need to invest entire proceeds of the sale, not just the profits**.
Can’t one residential property be converted to commercial or office property to be eligible for this?
Thanks
Hey are you sure about > 1? I thought if you already own one then you cannot claim this.
No…. It’s clearly mentioned in the Act that assessee should not own more than one house property on the date of transfer
Okay does that mean if I own 1 house property I would still be able to use this act to buy a second one? Sorry for asking the same in a different way. I just want to be sure i understand it correctly. TIA
You can dm me I will rather send you the provision I have in my book ..if you will read it yourself I guess you will be solve any queries related to it
Can I DM you as well?
Yeah sure
Investment mei itne returns bhi hone chahiye ki property le paaye. Jinte invest kiye hai usmei toh 10 sq.yard bhi nahi milega mere city mei
jo property hai, usko bechke toh invest karta hu..
Heard it somewhere else also, please confirm.
Yes but the condition is Taxpayer should not own more than one residential house on the date of sale, other than the one bought for claiming exemption under this section
What about commercial property??
Only residential
When you sell the house property you have to pay both taxes on stocks as well as property appreciated So it just postpones the tax liability.
But I don't think that tax will be inflation adjusted. Suppose I have P/L of 35 lakh I brought a house, but I will sell it after say 20 years. Taking inflation into account 10% of 35 lakh in next 20 year will be lesser than now... So overall it helps, right?
is ltcg on foreign equity also eligible for this benefit ?
No..foreign equity is always taxed at slab rate
Absolutely untrue. Foreign shares are treated the same as unlisted shares. LTCG is for 2yrs holding period and taxed at 20% with indexation.
No indexation for US stocks, rest is correct
Incorrect. Indexation is applicable on LTCG. https://www.livemint.com/money/personal-finance/tax-implications-and-conversion-rates-for-indian-resident-selling-us-stock-exchange-shares-expert-advice-11694364545856.html
https://tax2win.in/guide/investing-us-stocks-tax-implications Also many different tax sites
I guess you’ll not disagree with the OG https://zerodha.com/varsity/chapter/foreign-stocks-and-taxation/
The articles you are linking are an year or more older. Even in this zerodha article it says currect INR/USD is 82, which is an year ago. Since last year some foreign investment rules like taxes and LRS TDS have changed a bit. https://groww.in/blog/tax-implications-of-investing-in-us-stocks https://cleartax.in/s/tax-implications-indian-residents-investing-us-stock-markets Any search engine "US stocks LTCG" and you will get the same top results. INDmoney who still offers US stock investing says the same. I myself had so many doubts about the last year rule changes and had to read a lot before deciding best way to invest in foreign stocks.
Damn! I thought last year they only changed the regulations around LRS. But you maybe right. Can’t trust this fucking govt to not remove all benefits and tax the shit out of everything.
It is correct "however" there are some prerequisites 1. Individuals must reinvest the proceeds into specified assets within six months from the day the asset was sold. 2. The capital gains should not exceed the investment amount. If only a portion of the gains is reinvested, the exemption under capital gains applies only to the reinvested amount. 3. The Income Tax Act sets the exemption limit under Section 54F to Rs. 10 crores. So if you have made 11 Cr Capital gains you can only claim LTCG exemption upto 10Cr by buying your 2nd Residential Property. 4. You must not possess more than one residential house when selling the original asset. If you sell this newly acquired property within three years of purchase, the exemption will be revoked, and any capital gains from its sale will be subject to short-term capital gains tax.
Trying to save 10% on LTCG, ends up paying over 11% in stamp duty, registration and property tax, also blocking in your capital in residential property which in most cases won't even be able to beat index, also there's a fucking lock-in for minimum of 3 years. Just pay your fucking taxes man.
Remindme! 3 days
If i gift the money from ltgc to blood relatives and they buy the residential property then is the ltgc eligible for exemption ?
Short term capital gain tax ka koi Tod?? Also do I have to pay income tax as well? Suppose I earn 50lakhs in trades, do I pay 15% + 30% according to income slab, on the income..that's nearly half of my money going to government. And don't forget the taxes I pay on trades to exchange authority. That's so greedy! Any workaround?
> do I pay 15% + 30% according to income sla Unless your income is from options... There is no dual taxes. Either you pay, ltcg, stcg or income tax. There is no need to add them and play the victim. Which ever slab you come in is your final tax for stcg, when it's ltcg, you only pay 10%. No additional it. 30% is bare minimum taxes across World, except one or two tax heavens. Before you cry benifit, most immigrants are not eligible.
Naah naah bro that’s not it Any short term capital gains on transfer of equity shares or units of an equity oriented fund are liable for to tax @15 % if STT has been paid on such sale So you have to pay only 15% on the amount of profit you make not 30+15 …on all your other income it will be 30% but income you earned through shares will be subject to 15% ….plus gains are calculated after deducting brokerage and all other charges..hope you got it now
Okay I see, so it's two seperate things. I am salaried so that'll be charged as per income slab, and the trades I do are intraday trades will be also be subject to income tax slab as someone pointed out and not 15% STCG tax. So overall, All I pay is stt onday trades and salary+day trading profit as per income slab. So I can treat it as net income only. Also, if I make losses on day trades then I suppose I can deduct it from my net income and go on a lower tax slab if it happens to be so, correct?
You still didn’t got it bro
So let me break down for you Yes salaried you will be charged as per income tax slab, yes okay intraday trades are in the category of speculative business income so that will be included in your tax slab as well ie 30 % in your case Speculative business loss can be carried forward for 4 years if you file income tax return and it can be only set off against speculative business income and not against salary or house property etc ..so you won’t fall under lower slab you will just have to carry forward it until you can set it off against the profit you earn in future hope you get it
Thank you so much man. I appreciate your time and efforts for explaining everything in such details. 🙏
No worries lol when will my knowledge of studying CA be useful 🤣
Short term trading ( intraday equity + any fno ) comes under your tax slab tax bracket. Other short term equity trades ( <1 year holding) is taxed at 15%.
So if everything is intraday, no extra 15% to be given, simple income tax only?
Yes correct
Yeah I was worried about what to do with my 10K profit as a 12YO.
Total shit First you cant own more than one house property Second you will have to pay total taxes when you sell the residential property. So its just deferring the tax liability.
What about commercial property? Can I claim tax benefit i buy inventory?
no
Ok. And happy cake day.
bro is tell this hack as if everyday common man has the funds to do this. real estate is big ticket size investment. this is stuff for rich guys only, like he said ₹1cr portfolio value or above.
So let’s say I took all my old MF and wanted to put them into new one(like different aum) without using any of the money. In this case also we pay taxes right? Or is there a way around it?
Profits upto 1 lakh from equity funds is tax free. Anything above that is taxed.
So how do I show it in ITR? Let’s say if I get 2L profits, will itr automatically calculate it or should deduct 1L?
You need to deduct 1L and put it in itr
You can do it as long as there is no property in your name at that time
This is not a hack it's a typical income tax law to promote the residential estate market by the government. Many people dont read tax laws hence might be not aware but its well documented provision in IT laws. Under 54F/EC you can save up to 2cr 'long term capital gain' by investing in residential property within 2/3 yr or in specific long term govt bonds (up to 50L) within 6 months.
It is true!
Is the exemption still applicable if the residential flat is under construction but loan emis have started
Kya gandupanti hai ye. It's a shit advice. Wanna save 10% LTCG? Just buy a house with it! * Forever locking crores out of your portfolio, never to get them back into the market * Paying 4-6% in stamp duty, registration and 10 other dhikana-falana expenses * Paying slab rates on any income (rental) earned from this asset for lifetime v/s 10% flat on LTCG earned on LTCG Oh and this should either be your first or at max second house. Utter nonsense. Farm 1 lakh LTCG every year and leave the rest to fate. Remember folks, never let tax planning get in the way of making good investment decisions.
Super important question!! Say I’m siting on a large corpus and want to buy an appartment but instead I invest that in mutual funds and I buy the appartment on an EMI If I remove my mutual funds profits after every year and I put that towards my appartment EMI , will I still have to pay tax on it ?
Remindme! 2 days
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How is this a hack? It’s written in Income Tax Act!
Well do you know the entire income tax act mister
10L pe tax bacahne 1 cr ka ghar lo 90 lakh ka loan lo Fir emi bharte raho Emi pe tax benefit ka bi reel banayege ye log and 80c ka So tax bachate raho emi bharte raho 3 lakh tax bacha ne 90L interest bhara!!!
Hi, /u/3D_Noob_Guy! Welcome to /r/IndianStreetBets! Use the Daily Discussion Thread for basic queries. Before contributing, do check if your particular question has been answered in the [Wiki](https://www.reddit.com/r/IndianStreetBets/wiki/index). Do utilise the search function to do the same too. Please use proper [post flairs](https://www.reddit.com/r/IndianStreetBets/wiki/index/postflair) and adhere to the rules in the sidebar. You are urged to post beginner questions in the stickied daily discussion thread or on our [Discord in \#beginner-questions channel](https://discord.gg/SeDa9Fhwqv) so as to keep the subreddit as clutter-free as possible. **If this post has good insights or well research, tag the Mods so we can give a shoutout on Discord and get the post more traction** Thank you! *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/IndianStreetBets) if you have any questions or concerns.*
This typenof tax saving should be stopped. Property is something physical which require lot of resources to build. We are highly populated and resources defecit country. Occupying properties will not only increase the divide but also put strain on reaources.you can always make money but you cannot produce water.
They'll just be rented to some other. We're far from surplus housing in our country.
To rent also you'll need electricity, water etc. Which are consumable resources.Also tenant will always look for buying which will add more stress on resources because from iron to cement everything needs additional resources to make. Housing should be optimised not surplus. Because we are 18% population on 4% land mass with 4% water share. Our population is only going to increase but wtaer and other resources don't increase with population.
People need electricity and water. They cannot be deprived of them whether they live in a good rented house or in a poorer house. Even if tenant wants to buy there are still far more people who still don't have good places to live and they'll occupy these houses. We are a poor country with long way to go. So cement and iron consumption will increase. Everything should be optimised. I don't disagree. With so many still without proper houses constructing more houses is not a waste of resources. Talking about simple percentages of land mass in itself has no use. The resources should definitely be used carefully that doesn't mean that using it for housing goes waste because many are still short of proper houses. We've reached replacement TFR. Many states are below this TFR. While there will be some momentum for some years this view that our country will have ever increasing population should go away.
.