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Tax Advisory on Property Sale – Expert Capital Gain Planning for Real Estate Transactions

Pre-Sale Tax Planning, TDS Compliance, and Reinvestment Advisory for Residential and Commercial Property Sales in India

The sale of immovable property — residential house, commercial property, or plot of land — is one of the largest capital gain tax events in an individual's financial life. A well-planned property sale can save lakhs of rupees in tax through proper timing, correct cost computation, and optimal use of reinvestment exemptions under Sections 54, 54F, and 54EC. Our tax advisory on property sale begins well before the sale date — advising on the holding period verification, computation of expected gain, and the most tax-efficient reinvestment strategy.

Property sale compliance also includes TDS obligations — the buyer is required to deduct TDS at 1% under Section 194-IA if the sale consideration is Rs 50 lakh or more. For NRI sellers, the buyer must deduct TDS at 20% (or higher) under Section 195 unless the NRI obtains a lower TDS certificate. Our advisory covers both the seller's and the buyer's obligations — ensuring the transaction is fully compliant and the available capital gain exemptions are maximised through pre-sale planning.

Our Property Sale Tax Advisory Services

Pre-Sale Capital Gain Estimate

Computing the estimated capital gain before the property sale — based on proposed sale price, cost of acquisition, cost of improvement, indexed cost, and applicable Section 50C provisions — enabling informed decision-making.

TDS Under Section 194-IA (Buyer's Obligation)

Advising the buyer on TDS deduction at 1% on property purchase consideration above Rs 50 lakh, Form 26QB preparation and filing, and TDS certificate (Form 16B) issuance to the seller.

Section 54 Reinvestment Planning

Planning the reinvestment of LTCG in a new residential house under Section 54 — advising on the 2-year purchase / 3-year construction deadline, CGAS utilisation, and conditions for maximum exemption.

Section 54EC Bond Investment Advisory

Advising on investment of up to Rs 50 lakh in Section 54EC bonds (NHAI/REC) within 6 months of sale — coordinating with Section 54 to maximise combined exemption on large gains.

NRI Property Sale Compliance

Advisory for NRI sellers on TDS deduction by buyers under Section 195, obtaining a lower TDS certificate from the income tax authority, FEMA repatriation of sale proceeds, and special NRI capital gain rates.

Capital Gain Account Scheme (CGAS) Management

Advising on deposit of capital gain sale proceeds in the Capital Gain Account Scheme (CGAS) before the ITR due date — when reinvestment cannot be completed within the original deadline but the exemption must be preserved.

Our Approach

  • Pre-sale: reviewing the property documents, computing the expected capital gain, and advising on exemption options
  • Determining the indexed cost of acquisition and computing the gain under Sections 48 and 50C
  • Recommending the optimal combination of Section 54 reinvestment and Section 54EC bond investment
  • Advising on TDS compliance for the buyer and coordinating with both parties
  • Opening and managing the CGAS deposit where needed to protect the exemption within the ITR deadline
  • Preparing the capital gain computation and reporting it accurately in the income tax return

Benefits of Our Advisory

  • Pre-sale advisory allows full exemption planning before the transaction is concluded — maximising savings
  • Correct indexed cost computation significantly reduces the taxable capital gain
  • Combination of Section 54 + 54EC strategy can eliminate the entire capital gain tax on large property sales
  • TDS compliance support for the buyer prevents interest and penalty under Section 201
  • NRI sellers advised on lower TDS certificates to prevent large TDS deductions at source
  • CGAS management ensures the exemption is not lost if reinvestment is delayed beyond the ITR due date

Why Choose Us?

  • End-to-end advisory — from pre-sale planning through ITR filing — under one roof
  • Deep expertise in property capital gain computation including Section 50C and FMV provisions
  • Proactive TDS compliance advisory for both buyer and seller
  • NRI property sale experience — FEMA repatriation and lower TDS certificate support
  • Up-to-date knowledge of Finance Act 2024 property LTCG rate changes and transitional provisions

Frequently Asked Questions

What is Section 194-IA and when does the buyer deduct TDS on property?
Under Section 194-IA of the Income Tax Act, the buyer of immovable property (other than agricultural land) must deduct TDS at 1% of the total sale consideration if the consideration is Rs 50 lakh or more. The TDS must be deducted at the time of credit or payment, whichever is earlier. The buyer must deposit the TDS through Challan 26QB on the income tax portal and issue Form 16B (TDS certificate) to the seller within 15 days of the due date for issuing TDS certificates. Non-deduction attracts interest at 1% per month.
How is LTCG on property taxed after the Finance Act 2024?
Under the Finance Act 2024, for immovable property sold on or after 23 July 2024: LTCG is taxed at 12.5% without indexation. For properties acquired before 23 July 2024, a transitional provision applies — the taxpayer can choose between: (a) 12.5% without indexation; or (b) 20% with indexation — whichever results in the lower tax liability. For properties acquired on or after 23 July 2024, only the 12.5% without indexation rate applies. STCG on property (held 24 months or less) continues to be added to income and taxed at slab rates.
Can I claim Section 54 exemption if I purchase a property before selling the existing one?
Yes. Section 54 allows the purchase of a new residential house within 1 year before the date of sale of the old residential house. This means the new house can be purchased using existing funds or a home loan before the sale of the old house is concluded. The LTCG from the subsequent sale of the old house — up to the cost of the new house — is then exempt under Section 54. This 'purchase before sale' planning is particularly useful when the buyer wants to move into the new house without gap.
What TDS applies when an NRI sells property in India?
When a Non-Resident Indian (NRI) sells property in India, the buyer must deduct TDS under Section 195 at 20% of the entire sale consideration (or higher, depending on the applicable DTAA rate and the NRI's tax status). Unlike Section 194-IA for resident sellers (1% of consideration), Section 195 TDS for NRI sellers can be very large. To avoid this, the NRI can apply to the income tax authority for a lower TDS certificate under Section 197 — specifying the actual computed capital gain and requesting TDS only on the net gain at the applicable rate.
What happens if I cannot complete the Section 54 reinvestment before filing my ITR?
If the sale proceeds cannot be reinvested in a new residential house before the due date of the income tax return (July 31 or October 31 for the relevant assessment year), the unutilised LTCG must be deposited in the Capital Gain Account Scheme (CGAS) at a scheduled bank before the ITR due date. The amount deposited in the CGAS is treated as having been reinvested for the purpose of claiming the Section 54 exemption in the ITR. The deposited amount must then be used to purchase or construct the new house within the original Section 54 deadline of 2 or 3 years from the date of sale.

Plan Your Property Sale Tax Before You Sell

Pre-sale capital gain planning, Section 54 advisory, TDS compliance, and NRI property sale support.

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