I had one house and two flats. I sold one house in May 2023. I sold one flat in August 2023. My house sale gave me a capital gain and my flat sale gave me a capital loss. I have three questions. 1. Can I net out the capital gains by deducting the loss on sale of my flat 2. Can I invest in a new flat for the net capital gains amount to get exempt from paying capital gains tax. 3. If answer for 2 is no, can I invest in 54EC bonds to get exemption from paying capital gains tax

Ans: The TDS (Tax Deducted at Source) of 1% on the sale of property exceeding Rs 50 lakhs is applicable on the full sale consideration. In your case, since the total sale consideration was Rs 5,973,000, the TDS of Rs 59,730 was deducted as per the guidelines. Based on the information you've provided, you might be liable for Capital Gains Tax. Capital Gains Tax is calculated based on the difference between the selling price and the indexed purchase price. The indexed purchase price adjusts the original purchase price for inflation over the holding period.
The tax on long-term capital gains is usually 20% (plus applicable surcharge and cess) after considering any exemptions or deductions available under Section 54 or Section 54F if you are not investing in another property or capital gains bonds.

To close the transaction and fulfill your tax obligations, you should consider the following steps:

a. Calculate Capital Gains: As explained above, calculate the capital gains based on the indexed purchase price and selling price.

b. Pay Capital Gains Tax: If you decide not to invest in another property or capital gains bonds, you will need to pay the applicable capital gains tax. You can do this by filling out the appropriate sections in your income tax return and paying the tax amount.

c. File Income Tax Return: Ensure that you accurately report the capital gains in your income tax return for the assessment year.

d. Keep Documentation: Maintain all relevant documents related to the property sale, purchase, and tax calculations for future reference

Ans: To claim tax exemption from capital gain earned during the year from transfer of residential property, you have to invest gain amount in new house property within 3 years (if you are planning to construct new property) OR within a period of one year before or two years after the date of transfer of old house, you should acquire another residential house.