Income Tax on sale of house propery

Yes, but only for any gains over the first investment.

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Yes, you may have to pay taxes twice in this scenario. Here's how:

Firstly, when you receive the 40 lakhs in cash from the builder, you will be liable to pay tax on it as it will be considered as income under the Income Tax Act, 1961. The tax will be calculated as per your income tax slab rate. Additionally, there may be penalties or interest imposed if you fail to declare the cash income and pay taxes on it.

Secondly, when you sell the 2BHK flat that will be constructed on your property, you will be liable to pay capital gains tax on the sale proceeds. The capital gains tax will be calculated based on the difference between the sale price and the cost of acquisition (i.e., the value of the old property you sold to the builder).

If you hold the flat for more than two years from the date of completion of construction, it will be considered as a long-term capital asset and the capital gains tax will be calculated at a lower rate of 20% (plus surcharge and cess as applicable) after adjusting for inflation. However, if you sell the flat before the completion of two years, it will be considered as a short-term capital asset and the capital gains tax will be calculated at your income tax slab rate.

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