Anil Rego |377 Answers |Ask -Follow
Financial Planner - Answered on Jul 13, 2021
Short term capital asset attracts STCG. You can calculate STCG by deducting the cost of acquisition, expenses related to sale, cost of improvements if any from the sale price. STCG is added to your income and thus taxed at your income tax slab rate.
Whereas for a long-term capital asset would attract LTCG. You can calculate LTCG by deducting the indexed cost of acquisition, indexed cost of improvement and any expenses connected to sale. The tax rate applicable in this case is 20%.
Tax Savings for LTCG:
1. By purchasing a new house within 2 years or construct a new house within 3 years.
2. In case you don't wish to buy or construct a new house, you can invest your money on long term capital bonds like Rural Electrification Bonds or the NHAI bonds for a minimum of 5 years. However, you have to buy these bonds within 6 months from the sale of your plot and since the capital gain is below 50 lakhs, this is the most viable option for your mom.
3. You also have the option to set off your capital gain against any previous capital loss from the sale of any previous capital asset.
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