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Capital Gain - Selling Under Construction Property in 4 years

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Sharad Jain

21 Points Posted on 25 October 2023

Need your Suggestion -

Bought property in 2019 (Sale Agreement in March 2019)
Selling next month (Dec 2023)
Possession not yet done (next year expected)
Making Profit of Rs. 22 Lakhs and Buying Re-sale property

Confused If this transaction will be considered as LTCG or STCG. One person told me it will be STCG and I need to give 30% tac on this profit :( but as I read in many article it should be LTCG based on time period consideration from date of agreement and not from date of possession (hence no tax needs to be paid). Please help.

Replies (2)

Quick Summary

This discussion addresses capital gains tax for selling an under-construction property bought in 2019 and selling in 2023, before possession. The key question is whether this qualifies as Long-Term Capital Gains (LTCG) or Short-Term Capital Gains (STCG). Based on the sale agreement date, the holding period exceeds 24 months, suggesting it should be treated as LTCG, potentially incurring a 20% tax instead of the higher STCG rate. Advice is also given on tax-saving investments like NHAI bonds.

Ashwin Kumar

CA ipcc

315 Points Posted on 29 October 2023

If the holding period is more than 24 months incase of immovable property it is LTCG. Here it's more than 24 months so it's LTCG and tax is not 30%, I think it's 20% for LTCG. Further if you want to avoid tax invest in NHAI bonds within 6 months.