Property पे Short Term & Long Term Capital Gains Tax ऐसे Calculate करें - YouTube

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Namashkar, my name is Mukul and you are welcome in Asset Yogi.

Friends in our previous video, we have talked about the Capital gains tax on property.

Now, what is capital gains?

When you sell any property then the profit you get on it is called the capital gains tax.

If you sell that property within 24 months then it is called short term capital gains.

And if we sell it after 24 months then it is called long term capital gains.

Tax is imposed on both of these capital gains.

We will call it short term capital gains tax if it is imposed on short term capital gains.

And it is imposed on long term capital gains then it is called long term capital gains tax.

But on long term capital gains, you get tax exemptions that we discussed in the last video.

You should watch that video in which, I have explained how can you save your full tax.

In this video we will go a little further,

we will understand the short term gain tax and long term gain tax calculations.

If you have any tax liability, then what will be it? we will understand to calculate it.

So watch this video till last so that you can understand this calculation very well.

In fact, I will give you this calculator, you can download it.

And you can even do these calculations on your own.

Let's start the video.

Let's talk first talk about the short term capital tax.

This tax imposes on you, when you have a holding period is less than 24 months.

This means that from when you bought the property till it was sold, if this period is less than 24 months,

let's say you sold the property after 18 months.

So then your short term gains tax will be levied. And how much will be this tax?

Whatever your income tax bracket is, let's say you come under 30%,

so according to 30%, this tax will be levied.

Secondly, also remind this that there is no tax exemption on short term capital gains tax.

If you to this money, whatever you got money from selling,

if you invest that money even then there is no tax exemption.

That's why it is always beneficial, that you sell any property after 24 months.

But if you had sold any property, within the holding period of less than 24 months.

So what will be your tax made, let's understand its calculation.

So see, I had made a short term capital gains calculator here, it is a quite simple calculator.

I will give it for download also, you will find the link in the description below.

You understand it once,

here you have to first enter full-sale consideration,

for all yellow cells you see, you have to enter the input values in it.

Full sale consideration is the cost at which you sold your house or the property,

you have to enter its value in rupees.

From that, you have to subtract your transfer expenses,

transfer expenses mean that if the documentation cost you something.

However, the seller doesn't have to pay any money for documentation,

if you have any expenses then you can put them.

You have given some money to a real estate broker then you can include this here.

So it will be subtracted here and you will get the net sale consideration amount.

After that, you have to remove the cost of acquisition.

Now, what do you have to include in the cost of acquisition?

One is, whatever you bought that property for,

let's say you have bought it for 25 lacs, then you will put it here.

plus whatever you paid for stamp duty, registration charges or any of the brokerages was given,

you will include all those values.

So here the cost of acquisition will come.

After that, you will also subtract the cost of improvement from this.

Cost of improvement means whatever money you have expended on that property.

Whatever money you put in the renovation, interior decoration

whatever money has been invested on that property, you can include all this here.

So here we take an example.

Full-scale consideration, let's say we sold this property at 50 lacs.

So here I will enter the value of 50 lacs,

after that, we will enter here our transfer expenses.

Let's say the broker charged us 1%, then I will enter here the amount of 50,000 .

So the net sale consideration of ours comes out to be 49,50,000.

After that, we will enter the cost of acquisition, now since you held this property for a short period there,

will be not so much difference. I assume that let's say you bought the property for 42 lacs.

You had bought the raw flat for 42 lacs and on that, you have done some improvements,

you have expended some money on interiors, so that money let's say assume it is 5 lacs.

And here we got the amount of short term capital gains.

How do we get the short term capital gains?

From net sale consideration, subtracting the cost of acquisition means 42 lacs,

and Rs 5 lacs both. So we get 2.5 lacs as the short term capital gains.

If you had sold any property in less than 24 months then you can calculate the capital gains in this way.

After that, you have to apply the tax rate here.

If you come under the 20% bracket then you will write 20% here.

If you come under the 30% bracket then you will write 30% here.

And according to that, your tax liability will be calculated.

So 30% of 2.5 lacs will be, here I have assumed 30% rate.

So your tax liability becomes Rs 75,000.

So in this way, you can calculate your short term capital gains tax liability.

Now let's talk about the long term capital gains tax. The calculations of short term capital gains tax were quite easy.

In long term capital gains, we also have to include inflation.

It means that you will be benefited from inflation also.

How we will get it? Let us understand it once.

Here also, you will enter the full-scale consideration first, so I assume that we sold flat for 50 lacs.

Whatever your property is, I am assuming it is flat for now.

After that, you will enter the transfer expense here. I am assuming it also as 50,000.

Now see carefully, here you have to subtract,

index cost of acquisition and index cost of improvement.

Index cost of acquisition means if you had bought this property, let's say 5 years earlier.

So during 5 years dearness has also increased,

so the government says that you remove the dearness which increased normally, and then if you had earned a profit,

you have to pay tax on it.

So how do we calculate that? Let's understand that.

So here I will first tell you the calculation of tha index cost of acquisitions.

First, we will catch the actual cost of acquisition.

First I will assume that; this property was bought 5 years earlier and sold after 5 years.

So the actual cost of acquisition, 5 years earlier let's say for this property was 35 lacs. So I will put 35 lacs here.

After that, pay attention, you have to enter the cost inflation index here, when you had bought the property.

And cost inflation index at selling year.

From where you will get it? You will find it from the link from the website of incometax.gov.in.

I will provide you with the link in the description below.

After that, if you go to this link, you will be able to go the view all CII. View all CII is here.

The Cost Inflation Index of every year comes out through the government.

So here you will find the cost inflation index of every year.

After the financial year 2016-17, the index has been revised.

If you are doing calculations for the years before 2016-17, means that if you have sold the property before 2016-17.

So for that, you will find the index from here, by clicking click here you will be able to go there.

So see, you will find the old index from 1981-82 to 2016-17.

But after 2016-17, any property was being sold. They have to use this cost inflation index from here.

And secondly, one thing more I tell you,

it may be possible that you are selling the property after 2016-17.

and it may be possible that this property was bought before 2001,2002.

If this property is bought before 2001,2002; let's say in 1995 or 1996 or even in the 80's.

So for that, you have to take the inflation index of the starting that is 2001-02.

Means that,

You have to take CII of the acquisition year of 2001-02, that is 100.

But as we are supposing in our example that the property was sold in the financial year 2018-19.

This means that the cost index of the selling year will be 280.

And we assume that this property was bought 5 years ago that is in 2013-14.

So the CII of the acquisition year was 220.

We will put both these values in our model.

So the cost inflation index of the acquisition year that we saw was 220. So I entered the value 22 here.

And for the selling year we saw it 280, so put up entry 280 here.

So here you got the index cost of acquisition.

It is easy to calculate the index cost of the acquisition;

if you want to do it on your own through the calculator.

What you have to do is in the actual cost of acquisition,

the cost inflation index of the acquisition year, so you divide it from this.

And cost inflation index of the selling year, you will multiply by it.

Same thing I have applied to the formula.

This means; I have multiplied this cell with the CII of

the selling year and divided it by the cost inflation index of the acquisition year.

So we got the value of the index cost of acquisition.

This means that; what we have done in today's date when we have sold the property.

We also brought our acquisition cost to that level by adding inflation.

So we have taken the benefit of inflation here.

So our index cost of the acquisition comes out to be Rs 44,54,545.

Similarly, you can calculate the cost of improvement.

So the actual cost of acquisition, here acquisition is written first I will change it to improvement.

So the actual cost of improvement I assume that let's say you bought the house 5 years ago

but you did improvement means interior decoration in it after 1 year, i.e. 4 years ago.

So here we will take the cost of improvement let's say you spent 3 lacs so we entered 3 lac here.

Now we have to take the cost inflation index of the improvement year i.e. of 4 years ago, we have to take of 2014-15.

So again we go to the CII.

So we have taken CII as 220 for 2013-14 and for the year 2014-15, it is 240.

So here I will enter 240.

240 is the cost improvement index of the improvement year that is of 2014-15.

And the CII is of the selling year i.e. the current year 2018-19, the last financial year gone.

So we wrote 280 of that.

So the cost of improvement of ours i.e. index cost of improvement of our becomes 3,50,000.

4 years ago the expenses were of 3 lacs and after adding the inflation in today's date the expenditure will be of Rs 3,50,000.

So that thing has come here, i.e. comes in the calculation.

So if you subtracted the index cost of acquisition and index cost of improvement from the net sale consideration once.

So here you get gross long term capital gain.

This value is showing negative which means here is some mistake.

Here I have taken full sale consideration as 5 lac only, I will change it to 50 lacs.

And now the value should come out correct.

So see our gross long term capital gains is 1,45,000.

After that, you have to write exemption here, you remember I had talked about this in the last video.

If you invest this money which you have got from the capital gains, further in the residential property.

So you don't have to pay the taxes and your tax will be 0.

If I write 1,45,455 let's say, then it will be zero.

And along with that, it may be possible that; your capital gains can be changed into loss also.

It may be possible that your cost of acquisition,

maybe instead of 44 lacs, it becomes 50 lacs, index cost of acquisition.

It means that the value of your house or property has increased less than dearness.

So in one way, your capital got lost.

Now, what has to do with capital loss? We will talk about it soon. Firstly, we will finish off the calculations.

So for now, I will assume that you have not taken this exemption and have not invested this money anywhere.

So I will write it down as zero, and see what will be our tax liability formed.

Your net long-term capital gain is being made 1,45,455.

And the flat rate that is going on today's date on long-term capital gain tax is 20%.

So 20% of 1,45,455 is 29,091, it is your tax liability.

So we understood the calculations of short-term capital gain tax and long-term capital gain tax.

Now I will discuss one and two more important points related to this with you.

Suppose, the property you sold, that you have inherited,

that is, you didn't buy that property it was transferred from your parents to you.

In that case, how will we do that calculation?

In that case, you have to consider your parent's year of acquisition and cost of acquisition.

And if we talk about our example in which we sold the property for 50 lacs.

You didn't buy it 5 years ago, suppose your parents bought it 10 years ago.

Maybe it was transferred to you 5 years ago, But if your parents bought it 10 years ago.

It may be possible that they had bought it for 25 lacs, so you have to take the actual cost of acquisition 25 lacs.

And whatever the cost inflation index was 10 years ago,

you have to take that. And according to that your long term capital gains calculations is made.

And secondly, one more important point I will discuss with you.

Let us assume that instead of your capital gain, there is a capital loss.

That is, the value of your property does not increase as inflation has increased.

So in such a case, how will you treat it?

What will you do? You will show it in the form of capital loss in your income tax and you will file your income tax.

And, in future, if you have capital gain through any other property,

so you can adjust this capital gain in place of capital loss.

Now keep one thing in mind, the capital loss,

if it is short term capital loss then it will be adjusted against the short term capital gains.

And if it is long-term capital loss then it will be adjusted against the long term capital gains.

You can't adjust this against the overall tax liability that is made of yours.

And for how much time you can adjust this liability? For that, you will get a time period of 8 years.

And as I said earlier, this capital loss about which we are talking, you can adjust them only when;

you have shown it in your income tax.

That's why it is important that you must show your capital loss if you have, in your income tax.

Here I have discussed all the important points related to the calculations of capital gains tax.

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Till then keep learning, keep earning and stay happy as always.