Your gain is not the sale price minus the purchase price
That is the version most people carry in their heads, and it is almost always too high. The gain is what you sold for, less what the property genuinely cost you, less what it cost you to sell it.
"What it cost you" is wider than the figure on the purchase deed. It includes the stamp duty and registration you paid at the time, the brokerage on that purchase, and every capital improvement you have made since. Each of those reduces the gain, and each of them sits in paperwork that has usually been filed away and forgotten.
The point of this page is to help you find those pieces before you calculate anything, rather than after.
The eight things that decide the answer
Gather what you can. Approximate figures are fine at this stage; exact ones are needed only at filing.
| What to find | Why it matters |
|---|---|
| Date of purchase | Decides whether the gain is long-term, and whether indexation is available to you at all |
| Purchase price on the deed | The base of your cost |
| Stamp duty and registration on that purchase | Adds to your cost. Routinely left out, and on a 2015 purchase can be 6-7% of the price |
| Brokerage paid when you bought | Also part of the cost |
| Improvements, with the year of each | Capital improvements add to cost and are indexed from their own year, not the purchase year |
| Date of sale and the consideration | Starts every deadline, and decides whether TDS applied |
| Brokerage and transfer costs on the sale | Reduces the gain directly |
| How many owners were on the deed | Splits the gain, and gives each owner their own exemption limits |
Improvements, and why the year matters
If you spent money making the property better rather than just keeping it standing, that spending counts towards your cost. A new kitchen, an additional room, covered parking, a boundary wall: these are capital improvements.
Repainting, replacing a leaking tap, annual maintenance: these are repairs and do not count.
The year matters because each improvement is indexed from the year you spent the money, not from when you bought the property. Four lakh spent in 2019 is worth more against your gain than the same four lakh treated as a 2015 cost. List what you remember with rough years and amounts; nobody expects a perfect record.
If the property was in two names, the gain splits between the owners in their ownership share, and each owner has their own exemption limits and their own return to file. A gain that looks awkward in one pair of hands is often straightforward across two. This is the single question that most changes the shape of a plan, and the one sellers most often answer casually.
Whether you are a resident changes almost everything
For a resident seller, the buyer deducts 1% TDS where the price is ₹50 lakh or more, and it is straightforward to claim back against the final liability.
For an NRI seller the position is entirely different. The buyer is required to deduct tax on the whole sale value, not the gain, and at a much higher rate. It can be reduced with a lower deduction certificate obtained in advance from the assessing officer, but that has to be done before the sale completes. If it was not, a large sum sits with the tax department until the return is processed.
If you are an NRI and the buyer deducted 1%, or nothing, say so early. It is the most time-sensitive thing on this page.
The deadlines that cannot be moved
Two clocks start on the day the sale registers, and neither can be extended once it runs out.
- Advance tax. A capital gain is taxed in the quarter it arises, so an instalment falls due shortly after the sale. Miss it and interest accrues quietly until you file. This catches almost everybody, because a property sale is not the kind of income people are used to paying tax on before the year ends.
- Reinvestment windows. The routes that defer or remove the tax all have their own time limits running from the date of transfer, and some are short. A route that was open in month five is closed in month seven.
Which routes are open to you depends on your residential status, the type of property and what you intend to do next, which is why the form below asks about all three.
Reinvestment routes need cash. If the sale proceeds have already gone into repaying a loan, a business or another commitment, some options close regardless of the deadline. Worth knowing now rather than in February, because the planning changes completely.
What we can and cannot do
Wealth North is an AMFI-registered mutual fund distributor. We are not tax advisors, and we will not tell you which exemption to claim or how to compute your gain. Those are your chartered accountant's calls and we would rather say so than guess.
What we do is the part that follows: putting proceeds to work once the tax position is settled, handling the paperwork on bonds and mutual fund transactions, and providing the capital gains statements you will need at filing. If you do not have a CA, we can point you to one.
If you would like a second pair of eyes on the details before you speak to yours, send them below.