Long Term Capital Gain

Dear Client,
Capital Gains Tax (CGT) on the sale of property is computed on the basis of financial year in which the sale deed is executed. Therefore, even though the property was purchased in FY 2022-23, the CGT liability arises in the year of execution of sale deed/transfer, which is FY 2025-26. Since the holding period is from FY 2022-23 to FY 2025-26, which is over two years, the gain will be considered a long-term capital gain(LTCG). The tax will be calculated for the financial year 2025-26, and the Assessment Year (AY) 2026-27. In case, property is acquired before July 23, 2024, resident individuals and HUFs can choose between paying 20% tax with the indexation benefit or a flat 12.5% without it. This allows you to adjust the purchase price for inflation using the Cost Inflation Index (CII) from FY 2022-23 to reduce your taxable gain. Income Tax is a branch of law or legislation that eventually comes under the arena of Chartered Accountants and Tax Consultants, who have expertise and in-depth knowledge on the subject and may guide you properly to navigate the issue in the right way.