Short-term capital gains occur when a property is held for less than 24 months (earlier 36 months until FY 2016-17) before its sale. The gains made from such transactions are considered short-term capital gains and are subject to taxation.
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Tax Rate for Short-Term Capital Gains
Short-term capital gains on the sale of property are taxed based on your overall income at the applicable income tax rates. The gains are added to your total income for the financial year and taxed accordingly as per the income tax slabs applicable to you.
Tax Filing Requirement
If you have incurred short-term capital gains on the sale of property during the financial year, you are required to file your income tax return (ITR). Even if your total income falls below the taxable threshold, the short-term capital gains should be included in your tax return.
Tax Calculation and Reporting
To calculate the short-term capital gains, subtract the cost of acquisition (purchase price) and any allowable expenses from the sale price of the property. The resulting gain is added to your total income for the financial year and taxed accordingly. Report the short-term capital gains in the appropriate section of the ITR form.
Reporting Capital Gains in ITR
Depending on the type of property sale (residential, commercial, land, etc.), you need to select the relevant ITR form and report the details of the property sale, including the sale price, cost of acquisition, allowable expenses, and resulting gains. Ensure accurate reporting to comply with tax regulations.
Deductions and Exemptions
While short-term capital gains are taxable, you may be eligible for certain deductions or exemptions. For example, if the gains are reinvested in specified assets such as residential property or capital gains bonds within the stipulated time frame, according to Sections 54 and 54F of the Income Tax Act, you may be eligible to claim exemptions., respectively.
Even if your overall income is below the taxable threshold, short-term capital gains are taxable and must be reported on your income tax return.By fulfilling your tax obligations, you contribute to your financial well-being and adhere to the tax laws of the country.
Look up more articles here for a smooth first time tax-filing process. All the best!
