Capital gains are the profits that you make when you sell a property for more than what you paid for it. In Mumbai, capital gains are subject to taxation under the Income Tax Act, 1961. The tax rate and amount of capital gains tax that you may be liable to pay will depend on a number of factors, including the type of property sold, the length of time you owned the property, and the purchase price and sale price of the property.
Here's a brief overview of how capital gains tax is calculated when you sell a property in Mumbai:
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Long-term capital gains: If you sell a property that you have owned for more than 2 years, you will be liable to pay long-term capital gains tax. The current long-term capital gains tax rate is 20%, plus applicable surcharge and cess.
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Short-term capital gains: If you sell a property that you have owned for less than 2 years, you will be liable to pay short-term capital gains tax. The current short-term capital gains tax rate is 30%, plus applicable surcharge and cess.
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Cost of acquisition: The cost of acquisition is the amount you paid for the property when you purchased it. This includes the purchase price, as well as any additional expenses incurred in acquiring the property, such as registration fees, legal fees, and stamp duty.
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Cost of improvement: The cost of improvement is the amount you spent on improving the property after you purchased it. This includes expenses related to renovations, repairs, and other improvements that you made to the property.
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Indexed cost of acquisition: In order to account for inflation, the cost of acquisition and cost of improvement can be indexed to reflect the value of the property at the time of sale.
The calculation of capital gains tax can be quite complex, and it's important to consult with a qualified tax professional or accountant for guidance.