Question

Identify the tax consequences on the sale or exchange of the land consistent with capital gain rules. Consider the selling expense, broker’s fees, closing costs, appraisals, and surveys and the correct schedule form to complete.

Answer 1

Any immovable property like land ,Building sold within two years of it's purchase is treated as a short-term capital gain (STCG) and the profit from the sale is added to the income of the seller/owner and taxed at 30%.

If property sold after three years, the profit is treated as long-term capital gains and taxed at 20% after indexation.

All the transfer & sale related Expenses Including brokerage, commission ,Closing Cost, survey, appraisals e,tc are deducted from selling price to arrive at Net Selling price

Formate for Short term gain :

Particulars	Amount
Sale price of the Land	XXX
Less: Any transfer expenses such as brokerage, commission ,Closing Cost, survey, appraisals e,tc	XXX
Net Sale Consideration	XXX
Less: Purchase Price of the house	XXX
Less: House improvement costs	XXX
Gross Short Term Capital Gain	XXX
Less: Any exemptions available under sections 54, 54B, 54D, 54EC, 54ED, 54F, 54G	XXX
Net Short Term Capital Gain	XXX
Short Term Capital Gain Tax Liability for Mr. A (at his marginal tax rate slab of 30%)	XXX

Formate for calculation for long term capital gain with indexation benefits has been explained in the table below:

Particulars
Sale price of the Land	XXX
Less: Any transfer expenses such as brokerage, commission, Closing Cost, survey, appraisals	XXX
Net Sale Consideration	XXX
Less: Indexed acquisition cost of the house	XXX
Less: Indexed house improvement costs	XXX
Gross Long Term Capital Gain	XXX