04 February 2024
We Bought a residential plot for which we made a booking on *Jan 2021* along with an advance of 10% payment.
We got allotment letter on May 2021 clearly indicating plot number and everything in detail. We got registered sale agreement in August 2021 for the property. Later we kept on making payments as per schedule and got registry done in OCT 2023.
We got possession letter on OCT 2023.
Now in March 2024 we want to sell that plot which is a part of plotted development, as it is without construction will it qualify as STCG on sale or LTCG.
10 July 2024
Based on the information provided, here’s an analysis of whether the sale of your residential plot would qualify as Short Term Capital Gain (STCG) or Long Term Capital Gain (LTCG):
1. **Date of Acquisition**: The date of acquisition for tax purposes is generally considered as the date of registration of the sale agreement. In your case, the sale agreement was registered in August 2021.
2. **Date of Sale**: If you sell the plot in March 2024, the date of sale would be March 2024.
3. **Holding Period**: To determine whether the gain is STCG or LTCG, we need to look at the holding period: - **STCG**: If the property is held for less than 24 months (2 years) from the date of acquisition (registration of sale agreement in August 2021), the gain would be treated as Short Term Capital Gain (STCG). STCG is taxed at applicable slab rates as per income tax rules.
- **LTCG**: If the property is held for 24 months or more from the date of acquisition, the gain would be treated as Long Term Capital Gain (LTCG). LTCG on sale of a residential plot is currently taxed at 20% with indexation benefits available.
4. **Indexation Benefit**: For LTCG, indexation benefit allows you to adjust the purchase price based on inflation. This reduces the taxable LTCG amount and hence lowers the tax liability.
Given the timeline provided: - Date of acquisition (sale agreement registration): August 2021 - Date of sale: March 2024
Since the holding period exceeds 24 months (more than 2 years), the gain on the sale of your residential plot would generally qualify as Long Term Capital Gain (LTCG). Therefore, you would be eligible to apply indexation benefits to reduce your taxable LTCG amount.
**Important Note**: Taxation rules can vary based on individual circumstances and tax laws may change over time. It's advisable to consult with a qualified tax advisor or chartered accountant who can provide personalized advice based on your specific situation and prevailing tax regulations. They can also assist in calculating the exact amount of LTCG and guide you through the tax filing process.
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