Tax on Real Estate Companies

We on a regular basis buy lands and then sell the same land in parts / plots to others . Its generally that we buy and sell the land in same year. We want to create a Pvt. Ltd. Company which has its business as real estate. My queries are :-

1. Are the profits from such transaction are from our business activity , will be income from business or income from land (capital gain ) ?

2. Since the amount of transaction would exceed Rs. 40 lacs will we be assessable to SALES Tax and do we need to pay any kind of tax on the same.

3.What other taxes would be levid for such companies

Replies (2)

If you are holding the land as your stock in traded, then the profit or loss would be treated under the head business income. However, if it the land is held as a capital asset, then it would be treated as Capital gain / capital loss.

I believe that sales tax is not leviable on sale of land. As regards, other taxes, on any transfer of land, the stamp duty and other registration fees would be applicable.

@ rasesh : thnx for the help

My concern is that if we have Land as stock in trade in that case as per the sales tax wont we have to pay sales tax (treating it as good) and turnover going above 40lacs

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